Automotive Steel Segment A Bright Spot For Steelmakers
BMI View : As the Chinese economy rebalances towards a more consumption-driven growth model, demand for automobiles will remain strong, creating opportunities for steel manufacturers such as ArcelorMittal, which plan to supply high-grade automotive steel to automakers in China.
ArcelorMittal, the world's largest steelmaker, announced on June 14 that it plans to use its Chinese joint venture (JV), Hunan Valin Steel Co, to supply ultra-high-strength steel to meet fast-growing demand from China's automotive sector and offset the slackening demand seen in other product segments. The firm's strategy chimes with BMI's bullish outlook on the Chinese auto market.
BMI forecasts domestic auto production to grow at an average rate of 7.4% per annum over the 2014-2018 period, to hit 31.7mn vehicles by 2018. It has been our long-held view that suppliers and automakers alike will face attractive market opportunities due to these heady growth rates over the coming years.
|Bullish Production Outlook To Bolster Suppliers|
|China - Domestic Auto Production, Units (LHS); % growth (RHS)|