German car production jumps 25% upwards
German car production jumps 25% upwards

13 June 2022 – German car production jumped a whopping 25% in May 2022 compared to the same month last year. Good news for carmakers, who have recently been struggling with supply shortages. This significant increase in production could soon present many wholesalers and service centres with the problem of empty warehouses if they do not use the summer months effectively. The EU and US are planning import bans against products from forced labour. And Southeast Asia has problems with strikes and labour shortages.

German car production jumps up

Car production in Germany made a decent leap upwards in May 2022, increasing by almost 20%. Compared to the same month last year, more than 25% more vehicles were produced. Certainly, not all challenges in the automotive industry have been overcome yet, but the Ukraine shock now seems to have been overcome.

This is a good sign not only for the car supplier industry, but also for the European stockholders and service centres of steel, aluminium and stainless steel. This should now lead to a rapid reduction of inventories in the coming months.

Wait-and-see attitude dangerous

Even though various media are trying to push the commodity market into a wait-and-see attitude, this must be viewed with caution by companies that depend on free Safeguard quotas. Otherwise, a strong increase in demand, especially for energy, is already being reported for the coming winter months. Natural gas and LNG prices are picking up.

Keeping an eye on Safeguard Quotas

Especially in view of the EU Safeguard Quotas from 1 October 2022, many buyers must now take advantage of the summer. If companies hesitate too long, they will end up facing import quotas that are already overflowing and will no longer be able to import material before 1 January 2023 without having to pay expensive duties.

Market participants expect stable and rising prices

Another indication is the attitude of EUROFER, which has already criticised the new Safeguard quotas. And the view of many market participants that the current steel and stainless steel prices are stable and will develop an upward trend.

Europe: EC presents draft ban on products from forced labour

Most recently, the US government has come forward with a plan to ban forced labour products from China from the US market.

EU parliamentarians pass resolution with huge majority

Shortly afterwards, on 9 June 2022, EU parliamentarians passed a resolution that now also aims to ban products from forced labour from the European single market.

EC exerts pressure, initiative against forced labour without impact assessment

Now the EC is also exerting further pressure here and DG-Trade has already launched a call for an initiative without impact assessment on Sunday, 12 June 2022. This means that the European Commission wants to see this initiative implemented in the shortest possible time and without lengthy statistical observation periods.

Europeans under pressure

This suggests a trend on the part of the Europeans and the Americans towards new measures against Chinese imports. The United States, in particular, is urging the EU to take action against forced labour, focusing on allegations of human rights violations in the Chinese province of Xinjiang.

Southeast Asia hit by strikes and labour shortages

Ongoing strikes in the transport sector and labour shortages are hitting the Southeast Asian economy, which should be working off full order books. Problems are already being reported, especially in heavy industry and steel production.

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