China’s car production continued to increase in March, according to the latest data from the China Association of Automobile Manufacturers (CAAM). However, the pace of growth has continued to slow spreading concern that this year may be difficult for manufacturing steel demand, Kallanish notes.

China produced 2.28 million automobiles in March, just 3.8% higher than in March 2014. Over January-March, China produced 6.2 million units, up 5.32% year-on-year. This compares with growths rates of over 20% in some months just a little over a year ago.

Commercial vehicle production continued its decline, falling -21.71% y-on-y in March to just 355,000 units. As this includes steel intensive trucks and buses, this sector has a greater impact per unit on steel demand than passenger cars.

One bright spot remains sales of SUVs and MPVs, which were up 48.8% and 19.3% y-on-y respectively in March. These require a little more steel than smaller passenger cars and are typically from domestic brands, of which category 56.4% of SUVs and 90.6% of MPVs were sold in March. This crucially expands the market for domestic steelmakers to sell their autosheet, although capacity appears to be growing much faster than demand.