TPT January 2014

Global Marketplace

manufacturing in the US and strong industrial activity in Japan. As for the BRIC economies, they will experience a “mild improvement” in 2014, after disappointing last year, Mr Vermeij said. › Also on 24 October, the German automaker Daimler lent support to Mr Vermeij’s optimism on the automotive sector. The maker of Mercedes cars posted a third-quarter 2013 net profit of $2.6bn, up 53 per cent from a year earlier. In its announcement of the results, Daimler said that car demand had “stabilised at a low level in Western Europe, and a gradual improvement of the market situation [was] to be anticipated in the rest of the year.” Automotive China edges up on the last prerequisite for high-volume auto exports: parts designed and certified to Western standards According to senior executives at some of the largest auto parts companies in the West, Chinese automakers are starting to ask them to supply parts that meet American and European regulatory standards. Writing from Wuhan, China, in the New York Times , Keith Bradsher commented that the requests are “the clearest sign yet that, after more than a decade of preparation, Chinese manufacturers are starting to feel the confidence to begin high-volume auto exports to the West.” In another sign of this perceived shift in policy, a senior Chinese Commerce Ministry official said at the Global Automotive Forum – held in Wuhan in October – that Chinese automakers should prepare for the lowering of steep tariffs on imported cars. Those producers “may have a very huge impact from this reduction of tariffs,” said Chen Lin, the Commerce Ministry official who oversees international automotive investment policy. That change had never been acknowledged outright by a Chinese official, wrote Mr Bradsher, who is the Times ’s Hong Kong bureau chief. (“China Hints at Effort to Export Cars to West,” 17 October) Mr Chen also said that Chinese automakers should be ready for China to reduce its requirement that foreign automakers set up assembly plants in China only through 50-50 joint ventures with local partners, instead of as wholly foreign- owned factories. Mr Bradsher parsed the likely results of the lower tariffs. They would make it much easier for multinational corporations to import cars into China, while the removal of the joint-venture requirement would allow multinationals to streamline the management of their Chinese operations. (Their Chinese joint-venture partners have insisted on assigning managers and engineers to these projects to gain familiarity with Western technology and management.)

structures into the seabed. But, she wrote, “Floating wind farms could change the picture in a big way.” That would be very welcome to Japanese consumers. Their 50 nuclear reactors remain down, awaiting inspections and depriving the country of a power source that had provided close to 30 per cent of its electricity. Steel With consumption on the rise, Eurofer’s top market analyst sees better days just ahead for Europe’s steel producers Speaking at the Eurometal Steel Net forum in Copenhagen in October, the director of market analysis and economic studies at the European steel producers’ association Eurofer said that apparent European steel consumption would rise by around 3 per cent in 2014 after dropping 2-2.5 per cent last year. Jeroen Vermeij construed his use of apparent : despite a continuing drag on real consumption, there will be less negative steel intensity this year. Sharing his expectations for the European steel industry in the year ahead, Mr Vermeij said that the market will be buoyed by a general strengthening in macroeconomic activity, with growth in GDP (gross domestic product) of around 1.3 per cent. Steel-using sectors of the European Union will grow by a combined 2 per cent after a fall of 3 per cent in 2013, with stocks low throughout supply chains and inventories recovering. Internal demand will pick up, driven by investment in machinery and equipment and aided by a loosening-up of credit. Reporting for Platts (24 October), Colin Richardson noted Mr Vermeij’s estimate of the construction sector (residential, including repair and maintenance) as displaying the strongest prospects at that point, but overall no real rise in major steel- using construction was seen. Persistent issues include a scarcity of large projects, financial sector deleveraging, and unsold property stocks. Mr Vermeij’s forecast includes a European automotive sector growing around 2 per cent this year after a contraction in output and sales in 2013. The better investment climate, easier financing, and pent-up demand will mean production rising 3.5 per cent and vehicle exports gaining upward momentum, he said. Reviewing last year in steel, Mr Vermeij said that demand in the second half of 2013 had trended higher after a weak six months, with import pressure easing and end-use activity showing “relative improvement” (although from a low level) after stabilising in July-August – more so for flats than longs. Taking in the vista beyond Europe, Eurofer’s top market analyst said he expected this economic strengthening to be supported by an upturn in the largest developed economies. Among the upbeat indicators he cited were the growth of

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J anuary 2014