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Key takeaways:
While still below the pre-Covid-19 highs, the steady consistent results have been a welcome outlet for steel demand in what would otherwise be a lackluster post-pandemic recovery.
Indeed, steel demand from non-residential construction, a major steel consumer, has only shown pockets of strength in recent years, mainly the result of Biden-era stimulus policies.
Meanwhile, auto production accounts for about one quarter of US steel consumption and around 40% of flat-rolled steel consumption. The 10M unit annual rate of the past five years has supported flat-rolled steel demand as well as the push for greener steelmaking to supply this demand.
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In the five years prior to the 2020 Covid-19 pandemic, US light vehicle production averaged 11.6M units per year with the highest year, 2016, hitting over 12.2M units. The closures and recessionary effect of the shutdowns pulled output down to 8.8M units for the year in 2020.
Since 2021, U.S. automotive production has demonstrated a notable recovery from the pandemic-driven downturn of 2020. In 2021, the total production of cars and commercial vehicles combined was approximately 9.3M units.
The industry has yet to fully recover to pre-pandemic levels. The outlook for production in 2026 is for 10.2M units, a similar level to 2025, but 2027 is expected to result in growth to 10.5M units. Starting in 2028, production is forecasted to exceed the 11M unit threshold and remain in the 11-12M unit range through 2033.
While the performance in the industry so far since the pandemic has been steady, growth is considered lagging recovery expectations as a result of higher interest rates, inflation and general economic uncertainty.
Nevertheless, steady automotive production points to consistent steel demand which will contribute to supported steel flat product prices. Trump-era tariff policies, which reduced US flat-rolled steel imports in 2025 will also continue to provide price support, despite the aforementioned lackluster demand from other sectors.
Steady auto output levels do not tell the whole story for US automotive production, however. Underscoring the 10-11M unit output, we note a seismic structural shift in the types of vehicles produced through the coming five years. Indeed, in 2025, electric vehicle (EV) production accounted for about 15% of total production, while internal combustion (IC) cars made up 64%, and hybrid just over 20%.
Through 2031, the breakout will shift swiftly. Hybrid vehicles will hold position at about one quarter of the light vehicles produced. But EVs will surge to 42% of total production and IC vehicles falling to about one third.
This shift will have a profound impact on supply chains, logistics, sustainability and the need for transparency in the market. Manufacturers will also need to source greater supplies of materials to support EV and hybrid growth, such as batteries, battery raw materials, and critical minerals.
This shift will also provide a boost to development of charging infrastructure.
Moreover, Section 232. 201 and 301 tariffs, as well as the reframing of the USMCA agreement in 2026, mean that conventional supply chain logistics may not be applicable to the current and future environment where we operate.
Uncertainty has driven US steel prices higher than the fundamentals alone would suggest – historically as well as recently. Further supply chain disruptions due to policy shifts will continue to potentially add a premium to prices going forward. Manufacturers will need to watch out for policy and market shifts that will affect their supply.
Fastmarkets can support market participants in understanding market sizes, capacities, trade routes, inventories as well as the ever-expanding list of prices and pricing tools.
Fastmarkets’ automotive suite brings together the vital commercial insights, data and analytics that you need to help you make accurate forecasts, manage inventories and price risk, benchmark costs against your peers’ costs and refine your strategic plans. Find out more here.