Booming US automotive sales may keep prime scrap tight

NEW YORK (Scrap Monster) : The annualized automotive sales in the US surpassed 16.1 million vehicles in August. This would be the strongest yearly sales total since 2007. Contrary to the predictions that automotive-boom is a bubble ready to burst, the sales figures have been on the rise every month.

The average vehicle on US roads today is almost 11 years old. The new vehicles offer better mileage when compared to old vehicles. Moreover, the automotive sales have been boosted by the lower interest rates. The better performance and the exceedingly lower rate financing options have continued to prompt Americans to think about going for new vehicles.

The increasing automotive sales have heightened the demand for flat rolled and special bar quality steel. Most mills have order books already filled for the rest of 2013 and even for the year 2014.

The surge in automotive sales also explains the continuing strength of prime grades in most of the nation’s scrap markets. Prime grades were dragged down $10 or so in September on the continuing weakness of shredded, but nobody in the industry thinks prime grades will do anything but increase in the fourth quarter.