Alongside inflation, fears of recession have been increasing in recent weeks. Falling demand for computers and smartphones forced a handful of chipmakers, including Intel, Micron Technology and Advanced Micro Devices to warn of the looming downturn after two years of robust sales. Auto production will be supported by increasing chip supplies, should demand for consumer electronics keep deteriorating. However, OEMs will still face a dilemma similar to what happened a year ago but this time the tables are turned. Will they act quickly enough to accommodate the drying out of pent-up demand in 2022? Unlikely: we expect them to continue producing at current levels, which are still below pre-pandemic ones, with some improvements due to the need to clear backlog orders.
China’s performance in passenger car production and sales in June made it a complete outlier in a gloomy auto market. A rapidly recovered supply chain from the Covid-19 lockdowns enabled China to produce 2.2 M (31.6% m/m, 44% y/y) units in June, 26% above the 2019 level. Its 2022 H1 production volume reached 10.4 M units, 6% more than in 2021 H1 and 4.5% more than in 2019 H1. Improvements in production in Y/Y terms can also been seen in Germany, South Korea, and the US, among others, but not as much as in China. On the sales side, China’s various incentives (e.g., purchase tax cut) and subsidies introduced by the central and local governments boosted its June sales figures to 2.2 M units (36.9% m/m, 41.6% y/y), 24% above the 2019 level. 2022 H1 volume reached 10.3 M units (3.5% y/y), 2.2% more than in 2019 H1. Sales in other countries remain stumbled. These and other economic developments that impact commodity markets are discussed with CRU subscribers regularly. To enquire about CRU services or to discuss this topic in detail, get in touch with us.
CRU experts discussed the impact of the war in Ukraine on commodity markets in a recent webinar. Experts from all major commodity areas joined CRU’s Head of Economics and an energy specialist to discuss markets one month on from the invasion of Ukraine. The webinar is available to watch on-demand here.
