FRANKFURT -- European carmakers' steel supplies are secure, manufacturers said on Thursday, playing down prospects that shortages could hit output as they have at Japan's Nissan Motor Co Ltd.
But even if enough steel is on hand, high prices still pose a danger for carmakers who are hardly placed to pass on increased costs to choosy customers in a sluggish market kept under pressure by excess capacity, analysts say.
"We consider that the situation on the European market is not as tense as it is on the Japanese market," said a spokesman for Arcelor, the world's biggest steelmaker and the leading provider of steel to the automotive sector.
"We are supplying all our customers," said Erwin Schneider, a spokesman for Germany's ThyssenKrupp Steel, Europe's fourth-largest steelmaker by production volume.
Major customers in the auto and truck sector contacted by Reuters also insisted production was not jeopardized.
"This is a problem being faced by Nissan, but not one that is affecting Renault. Renault has no problems with steel availability," said a spokeswoman for the French carmaker, which has a 44 percent stake in Nissan.
"Concerning steel prices, we have contracts that mean we are well protected," she added.
Sweden's Volvo, the world's second-biggest truckmaker, is having no steel problems, spokesman Marten Wikforss said. "We have noted that the price inflation in raw materials is outpacing overall inflation, but that is a far cry from there being a shortage. We have not seen that."
Swedish truckmaker Scania sees no risks of running out of steel, spokesman Hans-Ake Danielsson said.
"We have not really heard of any steel shortage in Europe. The steel is there if you are willing to pay for it," he said.
"We have long-term contracts with our suppliers. Our steel supplies are not in danger," agreed a spokesman for German luxury carmaker BMW, which gets its steel from ThyssenKrupp, Voest-Alpine and Salzgitter.
Ford and Fiat said output was normal.
NISSAN GOES OFF LINE
Nissan said on Thursday it would shut output at some domestic car plants for five days after running out of steel supplies amid greater-than-expected demand.
"This is an industry first that a major (carmaker) has to shut down production due to lack of steel," HVB analyst Albrecht Denninghoff wrote in a note to clients, adding that European carmakers were better placed given long-running contracts.
"In our view company-specific and regional differences make it reasonable that there is no imminent danger of a similar event in the European car industry," he wrote.
"However in contrast to (truckmakers), it will be difficult to pass on steel price increases if the high price level sustains for another two to three years. This is another burden for the European volume segment, which already suffers from intense price competition."
He pointed out that truckmaker MAN AG and Europe's largest carmaker, Volkswagen AG, will actually pay less for steel this year than in 2003 thanks to long-term deals with suppliers.
Arcelor said this month it had already completed the bulk of annual contracts in the automotive and packaging sectors, raising prices by between 20 and 50 percent.
Steel prices have as much as doubled over the last year on the back of strong demand from China, forcing some heavy-machine makers to add a surcharge on tractors and bulldozers.
Volvo said on Wednesday it expected to raise prices again next year to offset higher commodity prices and a weak dollar.
But automakers are locked in fierce price wars, and customers, now used to getting a lot of extras for their money, will not readily accept higher price tags.
PSA Chairman Jean-Martin Folz has said higher steel, plastic and rubber prices will rip about 80 million euros ($104 million) from the company's full-year profit.
Mercedes Car Group, the flagship of DaimlerChrysler, says steel costs could add another 100 million euros a year to its expenses over time.