The U.S. auto strike enters its seventh day, and the market value of steel companies has shrunk by US$3.9 billion. The impact of the general strike in the U.S. auto industry has spread to upstream steel manufacturers. The UAW will discuss today whether to expand the scope of the strike to 18 factories of the three major automakers. If the situation continues to escalate and evolves into a general strike across the entire auto industry, U.S. quarterly GDP may be hit by 1.7 percentage points, according to estimates from the chief economist of PantheonMacroeconomics.

UAW negotiators reportedly said Stellantis Group's latest proposal "doesn't look good to us." The strike will continue, with the UAW expected to result in weekly demand contractions of 1.1 tons of copper and 9.5 tons of aluminum.

Currently, U.S. Steel has idled a blast furnace in Illinois to deal with the strike.

During the strike, the stock price of Timkensteel Corp., one of the world's three largest bearing manufacturers, fell by 21%, and the stock price of Cleveland-Cliffs Inc., North America's largest iron ore company, fell by 15%.

Currently, members of the S&P Super Composite Steel Index - including major producers Nucor Steel, Reliance Steel and Aluminum, Steel Dynamics and Cleveland-Cliffs - have lost a combined $3.9 billion in valuation.

"Automotive is one of the most concentrated sources of U.S. steel demand (about 25%), and we expect that if the strike continues, there may be further idleness or reductions in capacity," JPMorgan analyst Bill Peterson wrote in a note to clients on Thursday.

Steel prices are highly sensitive to negotiating trends. Peterson mentioned in the report that unless there is a prolonged standoff between the auto companies and their unions, analysts expect steel prices to begin to recover once the two sides are close to an agreement. 

Historically, the last strike by U.S. autoworkers against General Motors occurred in 2019, causing metal prices to fall by 1%. This strike targets the "Big Three" in Detroit. JP Morgan analyst Gregory Shearer said that "metal strength is higher" and the impact on metal demand may be greater than the General Motors strike in 2019.

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