11% growth forecast for next 4 years led by aluminum, ductile iron: despite the continued growth of imports, U.S. metal casting shipments are forecast to rebound to a 25-year high in 2008.

Despite a slight decrease in light vehicle production in 2004, U.S. metal casting shipments rose 3.6% over 2003 to 13.76 million tons. The rebound is expected to continue in each of the next four years and show an overall growth of 11% to 15.27 million tons in 2008.

While gray iron casting shipments, are expected to show a long-term decline of 0.5% per year and only a minimal gain in 2005 and subsequent years, other cast metals are expected to rise significantly. Ductile iron casting shipments are forecast to gain 4% in 2005 followed by a solid 14% increase in the next four years. Aluminum casting shipments are expected to rise 6.4% in 2005 and continue to grow in the short term by 18% through 2008. Though steel castings are only expected to rise 0.2% per year in the long-term, increases in railroad freight car deliveries in the short term are forecast to propel shipments to more than 1.3 million tons in 2008.

Although increases in the economy and industrial production in the U.S. during the next few years are expected to spur significant increases in casting demand, gains in imports are forecast to keep domestic casting shipments at a minimum in many market sectors. Imports of castings, in the form of raw castings and semi-finished and completed cast parts, are forecast to reach 3 million tons in 2005. On the flip side, based on a projected weak dollar next year and some strengthening in subsequent years, exports of raw castings and machined cast parts are forecast to grow to 1.8 million tons per year.

Interviews of casting end users and analyses of econometric forecasts have supported the optimism for solid gains in casting demand in most market sectors for the next four years. Metal casting sales, which are estimated at $31.37 billion in 2004, are forecast to increase to $39.3 billion per year by 2008.

Overall Metal Casting Shipments

Shipments of metal castings are forecast to increase 3.7% to 14.27 million tons in 2005 and grow by 11.1% to 15.27 million tons by 2008, as shown in Fig. 1. Figure 2 depicts the long-term forecast by the five main cast metals.

[FIGURES 1-2 OMITTED]

Ferrous Casting Shipments

Shipments of ferrous castings are forecast to rise 3.2% in 2005 to 10.8 million tons and gain an additional 600,000 tons per year by 2008 to 11.4 million tons. Ferrous casting sales are forecast to increase to more than $15% billion in 2005 and continue to grow to $18 billion by 2014.

Gray Iron--Gray iron casting shipments dropped to an all time low in 2003 to 4.7 million tons, gained only 0.7% in 2004 and are expected to gain only 1.8% in 2005 to 4.8 million tons. A long-term decline of 0.5% per year is forecast.

Ductile Iron--Ductile iron casting shipments are forecast to rise 4% in '04 to 4.6 million tons, rise to 5 million tons in 2008 and grow 1.4% annually to 5.07 million tons in 2014.

Cast Steel--Steel casting shipments are forecast to rise 6.3% in 2005, grow 15.5% in the short-term in 2008 and grow at a low annual rate of 0.2% in the next 10 years.

Nonferrous Metal Casting Shipments

Shipments of nonferrous castings are forecast to rise at an annual rate of 2% from 3.1 million tons in 2004 to 3.76 million tons in 2014. Nonferrous casting sales are forecast to grow from $13.6 billion in 2004 to $20.4 billion in 2014.

Aluminum--Casting shipments are forecast to grow 6.4% in 2005 to 2.5 million tons, rise in the short term 18% from '04 to '08 and grow in the long-term 2% annually to 2.8 million tons in 2014.

Copper-Base--Shipments of brass, bronze and other copper-base castings are forecast to grow 2% in 2005 and increase at an average annual rate of 0.3% to 2014.

Forecast By End-Use Industry

Following is a look at the forecast of casting demand by the major end-use industries for metal castings.

Motor Vehicles

The production of light vehicles in the U.S., which includes both passenger cars and light trucks, is expected to increase 4.8% in 2004 after dropping 2.1% in 2003. Based on the analysis of the year-to-date production at the end of eight months in 2004, light vehicle production is forecast to increase to 12.4 million for the year.

Forecast--It is forecast that shipments of gray iron castings for light vehicles are to decline annually to 1.1 million tons by 2008 and reduce at an annual long-term rate of 1.9% to reach a low of 891,000 tons in 2012. The average weight of gray iron per light vehicle is forecast to drop to 160 lbs. This is a loss of 500 lbs. per vehicle since 1981.

Ductile iron shipments for consumption in light vehicles are expected to increase 5.5% to 1.14 million tons in 2005. A long-term loss of 1.3% per year is forecast based on the conversion of suspension and differential parts to light metals. Steel casting use in trucks and military vehicles is forecast to rise to 65,000 tons in 2005 and to decline at a rate of 4.7% per year in the long term.

Aluminum casting weight per light vehicle has increased to 250 lbs. per vehicle in 2005 and is forecast to rise to 280 lbs. in 10 years. Aluminum casting shipments in motor vehicles are forecast to increase 8.3% in 2005 to 1.5 million tons and grow in the long term to 1.78 million tons by 2014.

The forecasted overall trend for magnesium casting usage in light vehicles is expected to grow from 62,000 tons in 2004 to 80,000 tons in 2005 and 140,000 tons by 2008.

Internal Combustion Engines

It is estimated that the diesel engine market consumes 90% of the gray and ductile iron castings shipped in this classification. The small gasoline segment consumes approximately 90% of the aluminum casting shipments in this market.

Forecast--The shipment of gray iron castings, used predominately in diesel engines, have rebounded in 2004 from four declining years as truck production recovered. Shipments are forecast to continue increasing in 2005 to 420,000 tons, and then begin to decline at an average annual rate of 1.3% as imports increase. Shipments of compacted graphite iron engine castings in 2005 are forecast at 38,000 tons.

Ductile iron casting shipments are "forecast to increase from 82,000 tons in 2004 to 86,000 tons in 2005, an increase of 5%. Shipments of carbon and low alloy steel castings for use in the turbine and turbine generator industries are forecast to decline at a rate of 0.6% per year from 17,000 tons in 2004 to 16,000 tons in 2014.

Aluminum castings in internal combustion engines, primarily used in lawn and garden and marine and sports equipment, are forecast to increase from 118,000 tons in 2004 to 146,000 tons in 2014, a long-term growth of 2.2% annually.

Agricultural Implement Manufacturing

Farm machinery sales are expected to grow 3% in 2005, led by two and four wheel tractor production increases. A long-term gain of 2.2% annually is used in the forecast of casting growth.

Forecast--Gray iron casting shipments for farm equipment, exclusive of engine castings, are forecast to increase from 297,000 tons in 2004 to 330,000 tons in 2014, an annual rate of 1.1%. Ductile iron castings are expected to continue to replace gray iron, malleable iron and steel and achieve a short-term growth of 14% to 2008, raising annual shipments to 130,000 tons.

Construction Machinery & Equipment

Construction machinery and equipment is composed of establishments primarily engaged in manufacturing heavy machinery and equipment used by the construction industries, such as bulldozers, concrete mixers, cranes, pavers, dredgers and power shovels. Forecasts are normally based on growth bin housing starts, building construction and public works, including highways, airports, and water and sewer projects.

Forecast--Shipments of gray iron castings are forecast to grow in 2005 to 247,000 tons, 2.9% over 2004, and grow in the long-term 0.4% per year to 250,000 tons in 2014. Ductile iron castings are forecast to increase 4% in 2005 and grow in the short term to 224,000 tons, a 15.5% increase over 2004. Steel casting consumption in construction machinery and equipment is forecast to decline at an annual rate of 0.4% due to replacement with ferritic ductile iron in specific applications. Carbon and low alloy steel casting shipments are forecast to rise to 164,000 tons in 2005 before beginning a slow decline in subsequent years.

Mining Machinery & Equipment

Shipments of mining machinery are expected to increase 5% in 2005 based on increases in mine production and in growth in exports of mining machinery. Exports are close to 50% of the total shipments and approximately 2.5 times imports.

Forecast--Steel casting shipments rose slightly in 2004, however, shipments continue to be low in 2005 at 115,000 tons despite the growth in machinery production caused by imports and loss of applications to other materials and fabrications.

Oil Field Equipment

Continuing high oil prices have kept the demand for oil field equipment at peak levels. An increase of 5% is expected in 2005, followed by a drop in subsequent years as prices lower.

Forecast--Shipments of ductile iron castings for use in oil field equipment are forecast to increase 4% in 2005 despite an increase in imports. Continued growth to 90,000 tons is forecast in 2008 based on the conversion of applications from gray iron and steel. A short-term gain of 5% is forecast for steel casting shipments in 2005, however some substitution of ductile iron will lower shipments in the next few years and at a rate of decline of 2.2% to 32,000 tons in 2014.

Valves & Fittings

Valves and fittings in this classification include industrial valves, fluid power valve and hose fittings, and other valves and fittings for use in the control of the flow of liquids and gases in pipes and mains. Imports of cast valve parts are estimated to exceed exports by almost 30%. This continuing increase in imports has caused a five-year decline in shipments commencing in 1998. Based on housing start increases, growth was reported in 2003 and 2004 and is expected in 2005.

Forecast--Gray iron valve castings are forecast to increase from 266,000 tons in 2004 to 296,000 tons in 2008 and continue near that level in the long-term. For ductile iron, a short-term rise in shipments of 14% by 2008 is forecast based on pipeline and water distribution growth. Malleable iron casting shipments are forecast to decrease from 38,000 tons in 2004 to 28,000 tons in 2014 as ductile iron is substituted for many applications. Carbon and low alloy steel castings are forecast to decline 12% in the next four years to 54,000 tons.

Brass, bronze and other copper-based alloy castings are expected to rise 10% in the next five years despite imports of more than 30,000 tons. For investment cast valves and fittings, a slight growth of 10,000 tons in shipments is forecast in the next five years.

Pressure Pipe

Ductile iron pipe shipments are forecast to increase from 2.06 million tons in 2004 to 2.53 million tons in 2014, a 2.1% per year increase. A high of 2.37 million tons is forecast for 2008. Exports continue to grow based on the strength of the euro and yen.

Metalworking Machinery & Equipment

This industry is composed of four major classifications of users of metal castings, including machine tools, dies and tools, rolling mill machinery and other metalworking machinery. After five years of steady decline, the metalworking machinery industry has slightly rebounded, showed a gain of 5% in 2004 and is expected to show a 4% gain in value of shipments in 2005.

Forecast--Shipments of machine tool castings dropped to a low- of 50,000 tons in 2003 but are expected to rise to a high of 56,000 tons in 2007. However, the consumption of steel and ductile iron castings in all metalworking machinery also has dropped and is forecast to continue at low levels. Carbon and low alloy rolls usage, normally at 4.2 tons per 1,000 tons of raw steel produced, has been reduced to 1.5 tons.

Power Hand Tools

The power tool market continues to be a growth market for both aluminum and magnesium castings.

Forecast--Aluminum die castings alone are expected to grow 7% in 2005 to 30,000 tons. Sand and permanent mold aluminum also is expected to rise to 13,000 tons per year. Magnesium casting usage is forecast to rise to 12,000 tons in 2005.

Special Industry Machinery

The five industries that have the most economic impact on the special machinery sector are machinery used for packaging, food products, paper, printing and textiles. Also, machinery used for the manufacture of cement, wood products, glass, clay, robber, cigarettes and shoes are included.

Forecast--Gray iron castings rebounded in 2004 to 210,000 tons after three down years of shipments for special machinery. A short-term growth of 12% is forecast to 236,000 tons by 2008. For ductile iron, casting shipments continue to grow based on the conversion of some applications from gray iron. A 4% growth is forecast in 2005 to 106,000 tons followed by a continued annual gain to 130,000 tons by 2008.

With corrosion-resistant steel castings. stainless steel alloys CFSM and CF8 make up 70% of the market and are mainly used in parts for food products machinery. A good short-term growth of more than 25% to 22,000 tons is forecast for 2008. Heat resistant steel castings are expected to grow 25% to 9,000 tons by 2008.

Pumps & Compressors

An increase in highway construction, bridge repair and public works (water and sewage treatment) increased demand for pumps and compressors in 2004. Oil field equipment growth has spurred growth and is forecast to continue growth in 2005.

Forecast--Gray iron casting shipments rebounded in 2004 to 234,000 tons. Short-term growth of 5% is expected for 2005 followed by a steady annual gain to a 270,000 ton peak year in 2008. Ductile iron casting shipments are forecast to expand at an average annual rate of 2% per year. A short-term growth of 20% to 105,000 tons is forecast for 2008.

Carbon and low alloy steel for pump applications are forecast to increase 5% in 2005 and 15% more by 2008 as usage in oil field and petrochemical parts increase. Corrosion-resistant pump parts are forecast to rise 22% by 2008 in similar industries plus new applications in waste-handling applications.

Gears, Speed Changers & Power Transmission Equipment

This classification is composed of establishments engaged in manufacturing mechanical power transmission equipment and parts for industrial machinery and includes such applications as gears, sprockets, pulleys, sheaves and other parts that transmit power.

Forecast--After three relatively poor years, gray iron shipments increased to 109,000 tons in 2004. A 5% increase is forecast for 2005. The long-term forecast is for a low growth rate of 0.7% per year because of the loss to imports and some conversion to plastics and ductile iron. Based on an increased use of austempered ductile iron as a replacement of forged gears and shafts, ductile iron casting shipments are forecast to rise 9% in 2005, followed by steady increase in the next four years to 37,000 tons by 2008.

Refrigeration, Air Conditioning & Heating Equipment

This industry includes those establishments primarily engaged in manufacturing equipment and systems utilizing the basic refrigeration cycle, including mechanical and absorption refrigerators for commercial and industrial use, refrigeration machinery, and complete air conditioning units for domestic, commercial and industrial use. The industry is expected to show a constant-dollar increase of about 3% in 2005 based on an increase in housing starts.

Forecast--After two relatively poor years, gray iron casting shipments were up slightly in 2004, but are expected to decrease in the next few years as imports increase. Ductile iron shipments are forecast to increase 7% in 2005 to 46,000 tons. Aluminum die castings, which approximate 80% of the total aluminum usage, are forecast to rise to 47,000 tons in 2005, an increase of 8% over 2004. Die castings have replaced iron castings in scroll and other compressor bodies.

Electrical Equipment

The constant dollar value of shipments by the electrical transmission, distribution and industrial equipment industries is expected to increase about 5% in 2005. The motor and generator industry also is expected to expand by 5% in 2005.

Forecast--The use of gray iron is forecast to continue to decline as conversion to aluminum increases along with imports. Gray iron shipments are to drop to 54,000 tons in 2005 and decline in the long term to 40,000 tons in 2014. Aluminum die castings in electric motors are forecast to increase to 32,000 tons in 2005 and rise to 38,000 tons by 2008. The use of zinc and lead die castings in such parts as fittings, pole line hardware, plugs, switches, sockets, fixtures and other electrical applications is expected to increase to 36,000 tons in 2005, but drop to 30,000 tons in later years based on conversion to plastics.

Household Appliances

Housing starts are forecast to rise 4.5% in 2005 and spur growth in appliance production.

Forecast---Gray iron casting shipments are forecast to decline 6.1% per year based on a loss to plastics and aluminum. Shipments are expected to drop 5,000 tons from 2003 to 2005. However, aluminum castings are forecast to increase to 72,000 tons in 2005 and continue growth to 78,000 by 2008.

Railroad

Freight car deliveries, which dropped to a low of 18,000 in 2002, have increased steadily to reach 40,000 in 2004. It is forecast that deliveries will approximate 48,000 in 2005 and continue to grow to 60,000 cars by 2008.

Forecast--Carbon and low alloy steel railroad casting shipments declined to 250,000 tons in 2002, rebounded to 360,000 and 440,000 tons respectively in 2003 and 2004, and are forecast to rise to 500,000 tons in 2005.

Instruments

This classification includes those establishments engaged in manufacturing engineering and scientific instruments, measuring and controlling instruments, optical and analytical instruments and photographic equipment. A long-term growth of 3.5% per year is forecast.

Forecast--Aluminum castings are expected to increase from 114,000 tons in 2004 to 141,000 tons in 2014, a 2.1% annual growth rate. Sand cast aluminum is expected to grow to 73,000 tons by 2008.

Capacity Utilization

The foundry industry has undergone a tremendous change in the last 50 years caused by many technological and econom4c factors. In 1955, there were 6150 foundries in the U.S. It is estimated that the industry will decline] to 2380 foundries in 2005, comprised of 80% with less than 100 employees.

Despite some new and expanded facilities, it is estimated that a loss of casting supply of 500,000 tons is to occur in 2005 vs. 2001 Table A indicates the forecast capacity and utilization rates. A total of 3.0 million tons of surplus supply is forecast.

Table A. Capacity & Utilization Forecast For 2005

Metal           Capacity (Tons)    Utilization (%)

Iron               11,660,000            82
Steel               1,460,000            84
Aluminum            2,990,000            82
Copper Base           400,000            81
Magnesium             140,000            81
Zinc/Lead             410,000            86
Other Non Fe           70,000            79
Investment            210,000            84

TOTAL              17,330,000            82

Table 1. Short- & Long-Term Market Summary for Gray Iron Castings

NAICS       Industry               Short Term        Long Term
                                   Growth '04/'08    AGR(*)

234110      Municipal               +5.5%            +0.3%
234910      Soil Pipe              -16%              -3.8%
331511      Ingot Molds              0%              -3.5%
332998      Sanitary/Radiator      -14.3%            -4%
33291       Valves/Fittings        +11.3%            +1%
333618      Internal Combustion     -8%              -1.3%
            Engines
33311       Farm Equipment          +7.7%            +1.1%
333120      Construction Equip.     +8.3%            +0.4%
333512      Machine Tool            +3.8%            +1.1%
33329       Special Industry       +12.4%            +0.5%
            Machinery
33391       Pumps/Compressors      +15.4%            +0.4%
3334        Refrigeration/AC         0%              +0.6%
333512      Electrical              -9.1%            -3.1%
3352        Household Appl.        -11.1%            -6.1%
336111,2    Light Vehicles          -0.6%            -1.9%
33612       Med. To Hvy. Trucks    +21.4%            +2.3%

TOTAL                               +2.8%            -0.5%

NAICS       Forecast Factors

234110      Housing Start Growth (2.7%Nr)/
            Imports 33% of Demand/
            Conversion to Ductile Iron/
234910      Replacement by Plastics
331511      Continuous Cast Steel at 98%
332998      Replacement by Plastic
33291       Growth in Housing Starts/
            Loss to Plastic & Ductile Iron/
            Imports at 37% of Demand/
333618      Diesel Engine Casting Imports
            >50% of Domestic Demand
33311       Growth in Tractor Sales, Exports/
            Conversion to Ductile Iron/
            Imports Up
333120      Growth in Building Activity/
            Exports of Machinery Rise
333512      A 58% Loss in Demand/
            Industry Moved Offshore
33329       Conversion to Ductile Iron
33391       Surge in '06 & '07/
            Conversion to Ductile Iron
3334        Loss to Imports
333512      Loss to Aluminum, Imports
3352        Loss to Plastics, AI
336111,2    Loss to Aluminum/
            Loss to Plastics, Imports
33612       Growth in Truck,Trailer

TOTAL       Gain 133,000 tons by 2008/
            Loss of 235,000 in 10 yrs.

* Average Annual Growth Rate (AGR) 2004-2014

Table 2. Short- & Long-Term Market Summary for Ductile Iron Casting
Shipments

NAICS       Industry               Short Term        Long Term
                                   Growth '04/'08    AGR (*)

33291       Valves/Fittings        +11.4%            +1.7%
332996      Pressure Pipe          +15%              +2.1%
33361       Int. Comb. Engines      +7.3%            +1.2%
33311       Farm Equipment         +13.6%            +2.1%
333120      Construction Equip.    +15.5%            +2%
33329       Special Industry       +27.5%            +2.2%
            Machinery
33391       Pump/ Compressors      +22.1%            +2%
333612      Gears,Power Trans.     +27.6%            +2.2%
336111,2    Light Vehicles          +1.6%            -1.3%
336212      Med. To Hvy. Truck     +36.2%            +3.2%

TOTAL                              +14.0%            +1.4%

NAICS       Forecast Factors

33291       Industry Growth/Replacement of
            Malleable/Gray Iron Imports Up
332996      Building Activity Growth Up/
            Exports Up/Loss to PVC
33361       Imports Increase
33311       Parallels Industry Growth/
            Replace Gray Iron
333120      Replace Gray Iron, Steel, Malleable/
            New Municipal Parts
33329       Replace Gray Iron/
            Peak in '06 & '07
33391       Replacement of Steel
333612      Growth in ADI
336111,2    Loss to AI in Suspension,
            Differential Parts/ ADI Growth/
            Replace Malleable Iron/
            Crankshaft Losses to Forgings
336212      Growth of Truck & Trailer
            Production/ Replacement of
            Steel, Malleable
TOTAL       Gain 620,000 tons by 2008

* Average Annual Growth Rate (AGR) 2004-2014

Table 3. Short- & Long-Term Market Summary for Steel Castings

                               Short Term        Long Term
NAICS     Industry             Growth '04/'08    AGR (*)

33291     Valves/Fittings        0%              +0.2%
333120    Construction Eq.      +1.6%            -0.2%
333131    Mining Machinery       0%              -0.4%
333132    Oil Field Equip.       0%              -1.4%
333911    Pumps                +21.6%            +1.3
33612     Trucks & Military    -10.8%            -4.7%
3365      Railroad             +37.9%            +1.3%

TOTAL                          +15.5%            +0.2%

NAICS     Forecast Factors

33291     Imports High/
          Growth in Stainless Applications
333120    Loss to Ductile iron
333131    Imports Up
333132    Peak in '04, '05 at High Prices
333911    Petrochemical, Chemical Up
33612     Substitution by Ductile Iron
3365      Freight Car Deliveries Grow

TOTAL     +179,000 Tons by 2008/Dependent on Railroad

* Average Annual Growth Rate (AGR) 2004-2014

Table 4. Short- & Long-Term Market Summary for Aluminum Castings

                                 Short Term        Long Term
NAICS     Industry               Growth '04/'08    AGR (*)

33361     Internal Combustion    +25.4%            +2.2%
333991    Power Tools             +9.8%            +1.7%
33341     Computer/Office          0%              -2.6%
3334      Refrigeration/AC       +22.4%            +2.5%
334514    Meters & Regulators    +20.7%            +1%
3352      Household Appliance    +11.4%            +1%
3361      Motor Vehicles         +19.1%            +2.3%
3364      Aircraft & Parts       +13.6%            +1.7%
3345      Instruments            +11.4%            +2.1%
3421      Marine & Other         +17.5%            +2.2%

TOTAL                            +18.1%            +2.0%

NAICS     Forecast Factors

33361     Growth in Lawn, Garden &
          Sport Engine Vehicles
333991    Loss to Magnesium, Plastics
33341     Loss to Plastic Machinery
3334      Replacement of Gray Iron
334514    Growth in Housing Starts/
          Loss to Plastics
3352      Replacement of Gray Iron/
          Loss to Plastics
3361      Conversion of Blocks, Heads,
          Suspension & Differential Parts
          to Aluminum/
          Growth to 280 lbs. of AI per Vehicle
3364      Loss to Titanium, Imports
3345      Parallels Industry Growth
3421      Growth Market

TOTAL     Gain 418,000 tons '04,'08

* Average Annual Growth Rate (AGR) 2004-2014

Table 5. Short- & Long-Term Market Summary for Copper-Base Casting
Shipments

                               Short Term         Long Term
NAICS     Industry             Growth '04/'08     AGR (*)

332913    Plumbing/Sanitary     +1.0%             -4.0%
332911    Industrial Valves     +7.8%             +0.8%
332510    Marine               +11.0%             +2.1%

TOTAL                           +8.8%             +0.3%

NAICS     Forecast Factors

332913    Loss to Plastics, Imports
332911    Imports Gain
332510    High Market Gain

TOTAL     Gain 28,000 tons

* Average Annual Growth Rate (AGR) 2004-2014

This article was abstracted from the 2005 AFS Metalcasting Forecast & Trends Report. For more information, contact AFS

Special Publications at 800/53 7-4237 or www.afsinc.org/estore.

A 50-year foundry industry veteran, Ken Kirgin founded Stratecasts in the early 19BOs to provide domestic and international forecasting and trends analysis and strategic planning.

For more information

Visit www.modernoasting.com for the "38th Census of World Casting Production--2003," MODERN CASTING, December 2004.

Kenneth H. Kirgin, Stratecasts Inc., Fort Myers, Florida