Semiconductor stoppages to continue in 2H: Carmakers

A global semiconductor shortage will continue to hamper European automotive production in the second half of this year, automakers say, expecting no improvement in global availability in the coming months. Car manufacturers including Audi, Ford, Stellantis, BMW and Jaguar Land Rover continue to operate at reduced rates for the foreseeable future.

German carmaker BMW has lost eight of the past 16 working days at its Oxford Mini plant. The company has reduced shifts by up to three days per week at its plant in Regensburg, Germany, and at Nedcar in the Netherlands.

American carmaker Ford expects to lose 10pc of planned global production in July-December and 1.1mn vehicles in total for 2021. The shortage may not be fully resolved until 2022, the company said.

"We expect to lose a couple thousand cars over May and June," German carmaker Audi told Argus. A typical car would require approximately 900kg of steel, according to Argus estimates. The company has notified 10,000 workers at its Ingolstadt and Neckarsulm sites that shifts may be reduced in June, as they have been in May. "But the situation is complex and volatile, and we are looking into it week by week," it said.

Newly formed European car manufacturer Stellantis — formed by the merger of PSA Group and Fiat Chrysler (FCA) in January — expects its second-quarter production to be more severely affected than the 11pc it lost in the first quarter.

Automobiles account for 60-70pc of sales for some European mills, according to Argus estimates, when factoring indirect shipments into the wider supply chain. European and Turkish steel service centres have expressed concern that a subsequent fall in demand could cool the consistent uptrend in flat steel prices since the start of this year.

Some European steel service centres noted reduced supply pressure this week, citing less urgent demand from buyers. And some pockets of availability have opened up from some mills, as auto-linked buyers have postponed tonnages. Nevertheless, overall market tightness means supply has been easily absorbed, and at high prices.

Meanwhile, European vehicle demand has a made a partial recovery. New car registrations in the EU surged by 218.6pc year on year to 862,000 units in April, mostly owing to the effects of the pandemic last year. Registrations were up by 24.4pc on the year in January-April 2021. But April registrations were still 34pc lower than 2019 levels.

In Turkey, Ford Otosan, a joint venture between Ford and Turkish company Koc Holding, suspended production at its van manufacturing plant in Golcuk over 19 April-13 June. Engine production at its Eskisehir plant will also be suspended, from the end of this month until 17 June.

The disruption has weighed on some Turkish steel traders' business. "The shutdowns have definitely affected our activity. We have a lot of spare stock and a lot of orders on hold," one Turkish trading company said. Still, most sellers do not expect a major threat to domestic prices in the second half of the year, noting that some carmakers continue to operate. Many Turkish mills also remain focused on exports amid strong international demand.

In the UK, Ford's engine plant in Dagenham, typically a supplier to its Turkish factories, has been operating single eight-hour shifts since mid-April. This is partly owing to the Turkish stoppages, a Ford representative said. The company's Halewood plant is under the same restrictions. Elsewhere, production at Jaguar Land Rover's Castle Bromwich and Halewood plants has been suspended indefinitely.

By Sam Angell and Brendan Kjellberg-Motton