X
<

What Iron Ore Price Does the Market Need to Rebalance?

PART:
1 2 3 4 5 6 7 8 9 10 11
Part 10
What Iron Ore Price Does the Market Need to Rebalance? PART 10 OF 11

China’s Auto Sales Rebounded in June: Gauging Iron Ore’s Impact

China’s auto demand

Since China’s automobile industry is the second-largest consumer of steel after the real estate sector, it’s important to track its developments.

China’s Auto Sales Rebounded in June: Gauging Iron Ore&#8217;s Impact

Interested in BHP? Don't miss the next report.

Receive e-mail alerts for new research on BHP

Success! You are now receiving e-mail alerts for new research. A temporary password for your new Market Realist account has been sent to your e-mail address.

Success! has been added to your Ticker Alerts.

Success! has been added to your Ticker Alerts. Subscriptions can be managed in your user profile.

After falling for two consecutive months, auto sales in China rose 4.5% year-over-year (or YoY) to 2.2 million units in June 2017. In the first six months of the year, auto sales totaled 13.4 million, a rise of 3.8% compared to the same period last year. 

Last year, auto sales rose 13.7% due to a cut in the sales tax on small-engine vehicles. The cut is still in place, though it’s at 7.5% this year, compared to 5% last year.

Growth to slow?

At the beginning of 2017, CAAM (China Association of Automobile Manufacturers) forecast that the growth rate in the auto sector would be 5% in 2017. Since June’s auto sales figures were released, CAAM has maintained its 2017 forecast. As tax incentives for car purchases have been rolled back, demand has shown signs of cooling.

Slowing growth in auto sales in the world’s largest auto market is negative for global steel (SLX) demand. Slowing growth ultimately affects iron ore demand, which is negative for seaborne iron ore players such as Vale (VALE), Rio Tinto (RIO), and BHP Billiton (BHP). 

AK Steel (AKS) and ArcelorMittal (MT) are also exposed to the automotive sector. A slowdown in auto sales will likely also affect these companies negatively.

X

Please select a profession that best describes you: