China's vehicle production, sales rebound in Oct, 2025 growth uncertain

China's vehicle production and sales returned to growth in October after declining in September, from a year earlier, but the momentum may not continue in 2025 due to global trade uncertainties that could arise from Donald Trump's reelection as US president, steel market sources said Nov. 13.

Vehicle output increased 3.6% from a year earlier to 2.996 million units in October and sales rose 7% on the year to 3.053 million units, both hitting the highest monthly volume so far in 2024, according to the China Association of Automobile Manufacturers.

Over January-October, total vehicle output increased 1.9% to 24.466 million units and sales rose 2.7% to 24.624 million units. The vehicle data includes passenger cars and commercial vehicles.

Some market sources said the government subsidies for consumer goods trade-ins and the latest monetary stimulus issued in late September helped improve domestic car consumption in October.

Strong car exports contributed to most of the growth in China's vehicle output and sales in 2024.

China exported 585,000 vehicles in October, expanding 11% on the year, according to China Customs. Vehicle exports over January-October rose 24.8% on the year to 5.285 million units.

"For 2025, the domestic car market should remain stable, but further growth momentum may be small," said a mill source. "The strength of China's car production and related steel demand next year will still depend on whether overseas markets can remain strong."

The mill source expects China's exports of manufactured goods to remain strong at least in the first half of 2025, before any potential trade conflicts arise in the second half of the year.

Vehicle manufacturing accounts for about 7% of China's total domestic steel consumption, with a critical influence over some of the flat steel products, particularly cold-rolled coil, according to market sources.

With improved vehicle sales and production, China's CRC prices and margins have also strengthened.

The Platts-assessed domestic CRC prices gained 13.1% from late September to Yuan 4,070/mt ($564/mt) on Nov. 12. Platts is part of S&P Global Commodity Insights.

Some market sources said further upside in CRC prices may be limited. However, prices may not decline sharply following China's latest monetary and fiscal stimulus measures.

The average spread between Chinese domestic CRC prices and hot-rolled coil in Shanghai widened to Yuan 580/mt ($80/mt) so far in November and Yuan 566/mt in October, from Yuan 493/mt in September and Yuan 470/mt in August, Platts data showed.

The production cost to convert HRC into CRC is typically around Yuan 400-500/mt, according to market sources.