The automobile production is now on a recovery track. Since the automobile industry is the biggest consumer for the gas and welding material market, the recovery trend is giving a good sign though the light is shining just slightly.

According to the statistics of the Japan Automobile Manufacturers Association, there was a record drop of 61% in May comparing with the same term of last year but a steady recovery was seen in June and the drop was improved to 22% in July.

The production trend of Toyota Motor, the top automobile manufacturer of Japan showed such a big drop as 56.1% in its domestic production in May. With the fall at the bottom, however, the trend has turned out upward rapidly marking an increase by 4.4% in September. Globally the production reached 973,000 and 857 vehicles up 7.6%.

According to the research by MarkLines of an automotive portal site, the production increased by 0.3% to 791,000 vehicles in September, and by 29.2% to 407,000 in October. It surely shows that a recovery trend is on the way.

Decreased Production of Argon by 8.4% in August

It is hard to judge to what extent the demand of industrial gases is linked to the recovery of the automobile production because of the diversified uses. Argon out of them is said to account for about 30% for welding. You may take it for an index. In terms of production of argon (JIMGA statistics) there was a slight continual drop of 5% or so from January to February, two digit decreases of 10.7% in March, 12.7% in April, 15.8% in May, 13.2% and 16.5% in July, and it was improved to a decrease of 8.4% in August.

The major three categories of demand lie in the single silicon crystal pulling, shielding gases for welding (MAG, MIG &TIG) and stainless (AOD steelmaking). Stainless steel out of them is sluggish, silicon is rather steady and welding is gradually recovering. Statistically, the trend of argon for welding may have something to do with the results.

Astonishing Recovery of Chinese Automobile Production 　

When we asked a major gas distributor about the demand of gases and welding materials in the Tokai District, they said that the demand is on a recovery track as a whole but it looks spotted. The operation rate of spare parts manufacturers affiliated under Toyota Motor is recovering at a good pace but that of Honda Motor, Nissan Motor and Mitsubishi Motor stays dull. Though not monopolistic, Toyota’s quite concentrated sales activities are overwhelming all others.

The automobile production in China is recovering at an astonishing pace. On October 13, the China Association of automobile manufacturers announced that the number of automobiles sold in September was 2.565 million up 12.8%.

They have kept positive results for six months in succession and attained a two-digit growth in May. For the period from January to September the number of delivered cars stayed at 17.116 million still down 6.9%. It really showed a V-shaped recovery.

Korea also increased sales by 23.2% to 342,000 cars in September, and the market of the U.S. also remarkably recovered with an increased delivery by 6.2% to 1.35 million and 1,600 cars. To put it conversely, the Japanese market has cooled down worst. They say the coronavirus infection caused the declination of consumer’s motivation, especially with a slow pace of recovery in the purchase of expensive commodities like a car. Not only domestic cars but also imported cars suffered a negative growth for 12 months consecutively down 12.7% to 31.489 cars in September.

Sluggish Demand is a Concern.

Toyota Motor plans to attain its production to 100% toward the end of the year, but it has already been a concern that an increased inventory is feared to compel the company to adjust the production. As aforementioned, the demand of automobiles seems to have not well recovered yet. Automobile manufacturers are trying to develop demand taking any possible measure like discounting or putting on points. The company cars remain concerned.

Usually March is a season when replacements of company cars are busy, but coincidently due to the coronavirus infection the replacements were postponed unfortunately this year. There was some expectation of addition of the postponed portion at the end of September, but it did not happen because the markets of all segments from manufacturers to food stayed dull.

Slow-going Movement of Auto Parts Business

A severe shock took place over the industry when Hitachi Metals announced on October 27 a workforce reduction of 3,200 employees as a means to implement renovation of the cost structure. The main reason is said to be the stagnated business of parts for automobiles. It shows that even such a big company is being compelled to call for early retirement in line with the optimization of using temporary workers and the reformation of business.

The skirts of the automobile industry are so wide that all the manufacturing industries are supported, but the industry exerts so great influences. As for the gas and welding material market it may call for consolidation, integration or closure of various plants. 　　

On the other hand, following the steelmaker’s closure of blast furnaces, ENEOS announced on October 27 that it will stop the productive function of its Chita Works probably in October 2021. It seems to be proving that the hardest phase of the coronavirus business downturn will start from now. In that sense an early restoration of the automobile industry is awaited seriously.