Monday, July 04, 2005

Auto Industry comment on Steel Prices

Steel makers quantify effects of price increases
4th July 2005

Following last week’s announcements from Corus and rival Arcelor of the end of multiple-year steel supply contracts with vehicle manufacturers, Automotive News Europe has noted that world steel prices rose last year from around €290 per tonne to almost double that amount.

The typical family car, says
ANE’s report, uses about 1 tonne of steel, though some 40% is lost as scrap (but re-used) during the production process. The doubling of steel prices has increased the total materials cost per car by 1-2%, according to Corus.

A countervailing effect of rising steel prices has been to improve the economics of end-of-life recycling of cars, now the financial responsibility of their manufacturers in Europe.

It shows how small the cost of steel is in reality, when a “doubling” in price only adds 1 to 2% to the overall cost of a car

1 comment:

sotn said...

You might want to read the Morici paper about manufacturing and steel prices - which has similar conclusions. See steelonthenet blog for further comment.