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“In Europe, it is less optimistic currently. The economic metrics this year have been far from upbeat. While the European Central Bank is broadly forecast to lower interest rates, consumers are likely to remain cautious, particularly on big-ticket items, as the ill effects of the cost-of-living crisis continue,” Fastmarkets analyst James Moore said.
Premiums for primary foundry alloy (PFA), which is mainly used in automotive parts, are down in the last 12 months.
Fastmarkets’ aluminium primary foundry alloy silicon 7 ingot premium, ddp Germany was assessed at $500-520 per tonne on Friday August 9, down from $600-650 per tonne on August 11, 2023, and down from the peak of $950-1,000 per tonne on June 10 2022.
According to Fastmarkets’ research team, 3.35 million tonnes of aluminium was used in the European light vehicle sector in 2023. This is roughly 37% of the yearly European demand for primary aluminium. Light vehicle output was 15.3 million units, which works back to approximately 219 kg of aluminium per vehicle, on average.
With further lightweighting needs due to electrification in vehicles, as well as a rising share of larger and premium vehicles, the aluminium usage per vehicle basis is expected to grow to 256 kg per vehicle in 2030, from 205 kg per vehicle in 2022, according to a 2023 study by Ducker Research and Consulting, commissioned by industry association European Aluminium.
“The real issue is the low level of vehicle output in Europe. While automotive output remains depressed, the European PFA sector will remain challenging,” Kirstine Veitch, principal consultant at Fastmarkets, said.
Mercedes-Benz reported a decline of 15.8% for unit sales of Mercedes-Benz cars in Germany, in comparison with the second quarter of 2023.
For Audi, the company produced 139,461 vehicles in the second quarter of 2024 in Germany, down 17.2% from 168,511 vehicles in the same quarter of 2023. In Eastern Europe, including Hungary and Slovakia, Audi produced 76,534 vehicles in the second quarter, down from 76,747 vehicles in the prior year quarter.
Despite BMW’s global production increasing by 1.1% in the second quarter of 2024 compared with 2023, deliveries of vehicles in Germany – Europe’s largest auto market – declined by 3.9% in the same period.
Data from European auto producers Stellantis and Volkswagen revealed they also sold fewer cars in the first half of 2024 compared with 2023.
‘We improved in the second quarter, but still have a challenging road ahead,” Jürgen Rittersberger, Audi’s chief financial officer, said in a statement.
Some market participants told Fastmarkets that they are receiving postponement requests from automotive customers.
While European automaker demand for aluminium is weak, the European PFA market could still be influencing trends in other regions.
In Japan, the demand for the light metal is expected to accelerate in the latter half of 2024, after automotive production demand had been damped by certification issues and recalls earlier in the year.
China, the world’s largest car market, is also a major factor in European demand. Yet so far, Chinese vehicle sales are lagging behind many automotive manufacturers’ expectations.
“However, the results of the ‘third plenum’ in China have shown that the Chinese government is taking the current economic situation seriously, targeting a qualitative economic development, and is taking action to, for example, increase domestic demand and mitigate the risks faced by the real estate sector,” BMW noted in a statement.
“We see the drop in the benchmark interest rate from [July 22] as the initial measure that will begin to bring some stability to the market,” the statement added.
But even if Chinese demand improves, European auto manufacturers may still get caught up in trade disputes.
“Escalating trade tensions with China are likely to be a significant headwind. Particularly if China responds in kind with import tariffs on European [electric vehicles],” Moore said.
Find out more about our coverage of the automotive industry and get a guide to commodity market trends, pricing dynamics and the automotive raw materials supply chain. Check out our dedicated automotive industry page here.