The death of steel in automotive – fact or fiction?

At this year’s Steel Success Strategies conference in Miami, the expert steel automotive panel delved into the risks and opportunities facing steel in automotive production

This article summarizes the discussion between John Catterall, Vice president, Automotive Program American Iron and Steel Institute AISI, Dean Kanelos, Market Development & Product Applications Manager, Nucor and Brian Bishop, Executive Vice President Cleveland Cliffs commercial, as they answered questions on the risks and opportunities for steel in automotive moving forward.

Do lighter vehicles mean less steel?

The automotive industry has been moving towards the perfect balance between sustainability and durability for some time now. Along with enhancing performance and improving fuel economy, car manufacturers are continually seeking to reduce the overall weight in vehicle production.

Because of its strength-to-weight ratio and lower density, aluminum scores higher than steel when it comes to vehicle lightweighting.

Is aluminium a real threat to steel in automotive production?

John Catterall, Vice president, Automotive Program American Iron and Steel Institute AISI

“There has been a trend where steel has done a good job of pushing back. I mean, when the aluminium 150 body came along, there was a prediction that all future truck bodies would be converted to aluminium — but we did a lot of good work in proving to the OEMs that maybe wasn’t the right thing to do.”

Catterall continued “So when it comes to body structures... even the aluminium industry is talking about their targets, which seems to be in the closures now, the side doors, the hood, the lift gates etc….”

“But certainly, when it comes to the smaller vehicles, I think there is an opportunity for steel to get back into some of those closures that have been converted to aluminium. It’s a little easier to convert back a closure because it’s a bolt-on system. So there is still an opportunity for steel in the closures, especially in the smaller vehicles, to get some of that demand back.”

So there is still an opportunity for steel in the closures, especially in the smaller vehicles

How does the electrification of transport impact steel use in automobile production?

Dean Kanelos, Market Development & Product Applications Manager, Nucor

“With electrification, things are changing. Before this, CAFE (Corporate average fuel economy standards) was the major driver for reducing the weight of a vehicle because the OEMs were required to get the weight down to avoid paying penalties. So, the OEMs were willing to pay extra for lightweighting to get some of the weight out of the vehicles, I mean, not a lot of weight, because they could optimize steel as well... But it’s a lot easier to switch over to aluminium, especially for large body panels, doors things like that.”

Kanelos continues “Electrification may change that, and the reason is that we are starting to approach a cost for battery systems of about $100 per kilowatt-hour, and with that, there is a trade-off between reducing the cost of the vehicle to get the same range for the EV... You can either increase the battery slightly or you could potentially go to aluminium, magnesium or composites to get that weight off, but by doing that, you are going to pay more for that vehicle. Vehicles are not exactly cheap right now, so affordability becomes part of the equation, including everything from repairability to other aspects.”

Kanelos continues "... steel as you know has done a very good job of reinventing itself over the years, and we will continue to do that; we are not staying still. So when OEMs are deciding how they will meet those challenges in the future in a cost-effective way, steel will definitely be part of that equation.”

For exclusive access to steel and aluminium price trends, forecasts and news, speak to our team for a free demo of the Fastmarkets platform.

So what does steel’s changing role in automotive mean for steel producers?

Brian Bishop, Executive Vice President Cleveland Cliffs commercial

“Automotive is in the midsts of reinventing itself with the EVs, so being a part of that reinvention in and of itself makes it exciting to be a provider”

Bishop continues..."Providers have the opportunity to help shape that evolution. At Cleveland Cliffs we are really excited about that and there are a lot of opportunities, research and development capabilities that are second to none, and we really look to utilize those to help shape that future and the evolution of the automotive space”

How is the chip shortage impacting steel demand?

Brian Bishop, Executive Vice President Cleveland Cliffs commercial

“Relating to the chip shortages and how that’s suppressing demand… If you think about it, where would the build rates have been for vehicles in North America prior to Covid? We would have probably been near 16 to 16 and a half million units on a steady rate, and that dipped down to 13 million units of build last year. Now it’s projected around 14 and a half million this year,”

Bishop continues... “So if you use the analogy of one ton of steel, per vehicle, the depth of the 13 million that we hit in 2021. If you use the 17 million annualized build rate, there are about 4 million tons of demand that are really out of the market... As the chip shortage starts to get remedied, things get back to a healthier build rate, that demand is there and that’s exciting from a steel producers standpoint to build upon.”

When do you think the chip crisis will end?

Brian Bishop, Executive Vice President Cleveland Cliffs commercial

“I wish I had the answer to that. I think the consensus is that things will continue to stabilize through the rest of this year and improve through 2023, and then kind of onwards and upward from there. Tying all of that together there are a lot of facets to be energized about.”

To keep up with steel price trends, forecasts and news, visit our metals and mining page.

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