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Steel’s Slippery Slope: How the UAW Strike is Shaking Up the Metal Market

The UAW strike is causing tremors beyond just the automobile assembly lines. Steel, the backbone of car manufacturing, is now sliding on a price curve, feeling the pinch of halted production.

In just a fortnight since the strike began, the Big Three automakers—those titans of the industry—have felt a staggering $1.12 billion blow, as per insights from the Anderson Economic Group. As we step into week three of the strike, where nearly 20% of the union’s workforce is on the picket line, the repercussions are becoming clear. Among the most palpable is the diminishing demand and dipping prices in the US steel market.

Case in point? The benchmark coiled sheet steel’s spot prices, a prime choice for crafting automotive components, have plummeted by a whopping 40% since April. If you’re keeping an eye on the market, you’d also notice the American Steel Index sliding by almost 6% in the recent month.

While the strike officially kickstarted in September, whispers in the steel industry suggest that the sector had been anticipating such a jolt for most of the year. As prices strived to bounce back from a pandemic-induced slump, the market was also wary of the demands put forth by UAW members. A few top demands? Better wages, reverting to the classic pension plans, and provisions for retiree healthcare.

Now, let’s talk steel stats. As per the American Iron and Steel Institute, steel proudly makes up more than half (approximately 54%) of materials used in a standard vehicle. From the car’s gleaming body to its exhaust pipes, steel’s prominence is undeniable. However, with a whopping 43 facilities across the nation devoid of active workers, steel’s demand is, understandably, slumping.

To break it down, S&P estimates reported by sources hint at a daily production loss of over 6,000 vehicles. This translates to a staggering nearly 6,000 tons of steel left unused each day.

Interestingly, while the metal market is adjusting to these shifts, the automakers seem to be cruising along—for now. The third quarter showcased Ford revving up with a 7.7% sales spike, General Motors accelerating with a 21% rise, and Stellantis experiencing a minor 1% dip.

Time will tell how these disruptions play out in the broader automotive landscape, but for now, the steel industry finds itself at an unexpected crossroads.