1994 super boom will soften somewhat in '95.

U.S. casting shipments reached a 13-year high in 1994. But as the economy slowly cools in '95, many casting markets will follow suit.

The super boom conditions experienced by most sectors of the American foundry industry in 1994 are expected to begin slowing up somewhat in 1995 as major casting end-use casting markets cool off slightly after two very good sales years. At the same time, improving overseas economies could spur casting exports, helping to negate any significant drop-off.

Overall, shipments of domestically produced metal castings are forecasted to decrease 4.7% on a casting weight basis in 1995 when compared with the super boom year of 1994. Keep in mind, though, that U.S. foundries shipped more castings in 1994 than any year since 1981. Shipments of castings from U.S. foundries are expected to decline to 13.9 million tons in 1995, compared with the 14.6 million tons shipped during 1994.

While many major casting market sectors are forecast to remain strong during the coming year, which could result in some casting supply problems, others will begin to weaken during the coming year. For example, record sales of light vehicles are expected to decline 4% from their lofty levels of 1994.

Generally, this slightly bearish forecast is based on a projected lower gross domestic product (GDP) growth of 2.5% and a decline of 1% in housing starts and construction activity. But as mentioned earlier, the recovery in Europe is beginning to take place and should spur export sales of castings to European Community nations as well as to Third World countries.

FERROUS CASTINGS

Gray Iron

Shipments of gray iron castings are forecasted to decline 4.5% in 1995, compared with 1994. This outlook is based on a slower growth rate for vehicle sales as well as a lower demand for ingot molds, soil pipe and municipal castings. Some 6.3 million tons of gray iron castings were shipped to all markets in 1994.

Light Vehicles - Domestic production of passenger cars and light trucks was expected to reach 12.4 million units in 1994, and decline to 11.9 million in 1995.

In the long term, shipments of gray iron castings used in passenger cars and light trucks are expected to decline 4.2% per year to a level of 1.5 million tons in 2004 - or 215 lb per vehicle. It is expected that at that time only 10% of the heads and 60% of the blocks will be produced in gray iron. A loss of nearly 10% of the brake parts to aluminum is also projected.

The expected reduction in auto sales in the U.S. during 1995, combined with the forecasted substitution of aluminum for gray iron, has resulted in a projected reduction of 9% in gray iron use in light vehicles to 2.1 million tons. Noncaptive shipments, however, should increase slightly in special iron castings because of the decrease in captive capacity. This is largely the result of the closing of one or two captive casting facilities along with additional closings and shrinkage in capacity.

Municipal Castings - Shipments of municipal castings in the U.S. are expected to grow slightly at a rate of 0.4% in 1995, compared to 1994. This projection is based on a slight decrease in imports combined with a minimum reduction in construction activity.

Weakness in the nonresidential construction sector in 1994 reflected the overcapacity of office buildings and other commercial buildings, which resulted from the building boom during the 1980s. This declining rate is expected to cease in 1995. A forecasted decrease of 1% in housing starts, offset by a 2.5% increase in public works activity and a slight decrease in nonresidential construction, could lead to a 1% reduction in overall construction.

Ingot Molds - Gray iron ingot mold shipments in 1995 are projected to drop to 330,000 tons and to 280,000 tons in 1996, a decline of 9% per year. Nearly 90% of the raw steel produced in the U.S. will likely be processed by the continuous casting method by 1998, and 95% by the year 2004. By the end of the decade, ingot molds will be used only for specialty steels. At the same time, lower auto sales in 1996 are forecasted to drop raw steel demand to 85 million tons.

Sanitary and Radiator - This category of cast parts is heavily influenced by housing construction. Shipments of gray iron castings to these markets are expected to remain about the same for 1995 as 1994. On a longer-term basis, however, they will decline at an annual rate of 2.9%.

Valves & Fittings - Shipments of valves and pipe fittings, expressed in constant dollars, increased 1% in 1993 and 3% in 1994, reflecting the recovery of the U.S. valve manufacturing sector. Exports of valves and pipe fittings will expand in 1995 and offset the forecasted downturn in the U.S. market. Gray iron valve castings are forecasted to continue strong in 1995 at 256,000 tons and grow in the long term at a rate of 1% per year.

Internal Combustion Engines - Based on the increased use of diesel engines in trucks, construction and mining equipment, oil field equipment, farm machinery, generator and power machinery, locomotive and other equipment, engine production grew 16% in 1993 and 14% in 1994 to reach boom proportions. Use of small gasoline engines in garden equipment, motorcycles, marine and agricultural vehicles is expected to grow 3% in 1995. Gray iron castings for these markets grew 16% in 1993 and 14% in 1994 to 490,000 tons. Shipments in 1995 should remain about the same as 1994.

Farm Machinery - Shipments of farm machinery grew 4% in constant dollars during 1993. In 1994, it was expected to show an overall gain of 6% despite an expected production decline of 3% in the last half. Gray iron castings for farm equipment (exclusive of engine castings) am forecasted to drop slightly to 270,000 tons in 1995 from 278,000 tons in 1994.

Construction Machinery and Equipment - Shipments of construction equipment grew 4% in constant dollars in 1993, spurred by a 12% rise in housing starts and 8% rise in construction activity. The continued increase in housing starts (8% in '94) and in construction activity (10% in '94) led to an estimated 8% increase in construction equipment shipments during this past year. Gray iron casting shipments in this sector were projected to reach 199,000 tons in 1994 and to decline slightly in 1995.

Mining Machinery - Shipments in the U.S. mining machinery industry increased 1% in 1993. Exports of mining machinery, which are 57% of the total shipments and 2 1/2 times imports, increased 8% in 1994. The 1995 tonnage of gray iron castings supplied to the mining machinery market is expected to equal 1994, followed by a 6% decline in 1996.

Machine Tools - Spurred by the auto industry, machine tool shipments grew 21% in 1993 and continued to grow by as much as 10% in 1994. These growth years will likely be followed by slight declines of 1.7% in the use of gray iron castings in 1995 and '96.

Pumps and Compressors - Shipments in 1993 by U.S. pump and compressor manufacturers increased nearly 1% and grew by nearly 3% in 1994. Gray iron castings for this market grew to 230,000 tons in 1994 and should decrease by 2% in 1995.

Refrigeration and Air Conditioning - The U.S. has nearly 50% of the world's air conditioning and refrigeration market. Exports continue to be strong at 23% of the total market, and are expected to increase 15% in 1995 as the European economy recovers. Currently, exports in this area are twice that of imports. Gray iron shipments are estimated at 131,000 tons in 1994 and 1995.

Household Appliances - The market for gray iron castings in household appliances continues to decline 2.5% per year due to material substitution of plastics. Annual tonnages were down to 92,000 tons in 1994 and are expected to decrease to 80,000 in 1996.

Ductile Iron

Ductile iron casting shipments by U.S. foundries were expected to reach a record peak in 1994 of 4 million tons as both pipe and motor vehicle market sectors had super boom years. In the short term, ductile iron shipments will decline about 3.9% in 1995 as these and other markets decline.

Pipe - Ductile iron pipe grew 7% in 1993 and again in 1994 to achieve record shipments of nearly 1.9 million tons. The increase in exports experienced in 1994 should again assist pipe producers in keeping production levels near 1.8 million tons in 1995.

Motor Vehicles - Shipments of ductile iron castings for use in passenger cars and light trucks were expected to reach a record 1.1 million tons in 1994, a 19% increase over 1993. Shortages in the supply of ductile iron castings surfaced in mid-1994 and are expected to continue into 1995 as record demand continues. Based on current OEM projections, a slight 4% drop in demand could lower casting shipments in 1995 by 44,000 from 1994 figures.

Production of medium-to-heavy trucks is estimated to reach 320,000 units in 1994 and hold near 300,000 units in 1995. The record consumption of 155,000 estimated tons of ductile iron in this market in 1994 (exclusive of diesel engine parts) is expected to drop to 146,000 tons in 1995.

Valves and Fittings - Shipments of ductile iron valves and fittings reached a record high of 200,000 tons in 1994, and are expected to stay close to that figure in 1995. Malleable iron continues to be specified under ANSI B1.3 for threaded pipe fittings. By 2000, it is expected that additional ductile iron pipe fitting castings will replace malleable iron.

Special Industry Machinery - This classification is comprised of six major industries and many smallers ones that consume castings. The major industries manufacture machinery for: food products, paper industries, printing trades, textiles, packaging and plastics.

The resurgence of the paper and printing industries, after two consecutive years of decline, led to a 4% industrywide gain in 1994. This gain helped spur ductile iron shipments to a new peak of 95,000 tons. This tonnage should remain about the same in 1995 and decrease slightly to 89,000 in 1996 as the economy slows down.

The long-term gain for ductile iron should exceed overall industry growth and reach 4% per year growth to the year 2004 (to 140,000 tons), based on new applications and continued replacement of fabrications and forgings.

Farm Equipment - The use of ductile iron in farm equipment began its recovery from the downturn year of 1992 and grew to 98,000 tons in 1994. This tonnage, far below the peak years of the 1980s and 1990, is expected to remain at about the same level in 1995.

The greatest change during the past two years in this market sector has been the reduction of captive capacity and supply of ductile iron castings with the closing of the John Deere foundry in East Moline, Illinois. Based on a total U.S. demand of 99,000 tons in 1995, coupled with estimated exports of 10,000 tons, shipments from noncaptive foundries should reach 109,000 tons.

Construction Machinery & Equipment - Ductile iron shipments to these markets reached 150,000 tons in 1994. A slight drop to 146,000 tons is expected in 1995 as construction activity declines. This forecast is based largely on new applications created by the replacement of steel in rear axle and other machinery castings, along with the use of austempered ductile irons in applications that normally use forgings.

Power Transmission - Ductile iron shipments in this market are expected to reach 25,000 tons in 1995 and grow at a 3.4% clip in the longterm, mostly in the areas of gears, shafts and other power transmission equipment. This annual growth will also be spurred through the replacement of forged gears and other castings with austempered and other ductile irons.

Oil Field Machinery and Equipment - In 1993, the petroleum equipment industry shipped 1% more than 1992. (Actual 1994 figures were not available at this writing.) Ductile iron shipments to this market remained relatively level in 1994 at 48,000 tons and should decline only about 2% in 1995.

Malleable Iron

Malleable iron casting shipments grew 5% in 1994 to 252,000 tons based on increased production in automotive applications and growth in the threaded pipe fitting market. Total malleable shipments are forecasted to decline to 238,000 tons in 1995. In the long term, the projected conversion of fittings as well as some automotive parts will play a role in malleable iron's drop-off.

Steel Castings

Steel casting shipments increased 13% in 1994 to almost 1.3 million tons. In 1995, most steel casting markets should remain at about the same level as 1994 or show slight growth. The forecast for steel casting shipments in 1995 could change significantly based on the increase or decrease in the production of railroad cars. A variety of opinions exists on where exactly this market is going during the coming year.

Following is a summary of projected 1995 steel casting shipments by major alloy categories.

Carbon & Low-Alloy       964,000 tons
Corrosion-Resistant       71,000 tons
Heat-Resistant            32,000 tons
Mn & Other                61,000 tons

Railroad - Based on the expected delivery of 40,000 freight cars in 1994, shipments to this industry are expected to reach 610,000 tons of carbon and low-alloy cast steels. Interviews conducted last September indicate that freight car shipments could drop to 30,000 cars in 1995, thus reducing casting consumption to 480,000 tons.

Construction - Increased exports of construction machinery to Europe and Third World countries should offset the expected decline in the U.S. economy in 1995-1996 and help to maintain a high level of steel casting demand in this market sector. Shipments of carbon steel castings are expected to reach 142,000 tons in 1995 and drop only slightly to 137,000 tons in 1996.

Mining - Resurgence of the mining machinery industry in the U.S. is spurring a growth in steel casting shipments. Though shipments are far below 1989 and other peak years of the '80s, they did reach 78,000 tons in 1994. They are forecasted to increase to 80,000 tons, despite the downturn in the general economy.

Valves and Pumps - Carbon and low-alloy steel castings for valve applications reached 65,000 tons in 1994. Diminished foreign competition due to the devaluation of the dollar against the yen, lira and French franc are the most important factors in the comeback of steel valves. The demand for carbon and low-alloy valve castings looks as if it will remain stable in 1995 at 64,000 tons.

Carbon and low-alloy steel for pumping applications are forecasted to slip slightly from the 16,000 tons shipped in 1994 to 15,000 tons in 1995.

Trucks - Carbon and low-alloy steel castings are expected to decrease from 60,000 tons in 1994 to 56,000 tons in 1995. This is largely due to the loss of these applications to ductile irons.

Corrosion-resistant cast steels continue to increase at higher annual growth rates than most cast metals. Shipments of corrosion-resistant cast steels are projected to increase from 70,000 tons in 1994 to 93,000 tons in 2004, an annual growth rate of 2.9%. Overall, shipments are expected to reach up to 71,000 tons during 1995.

Heat-resistant steel castings are expected to increase in the long term from 32,000 tons in 1994 to 36,000 tons in 2004. Shipments in 1995 should match 1994.

Manganese steels and other wear-resistant steels, which totaled 65,000 tons in 1994, are expected to maintain production in 1995, and to move up and down with the mining and railroad industries in the future.

NONFERROUS CASTINGS

Aluminum

Shipments of aluminum castings were projected to reach nearly 1.7 million tons in 1994 and drop slightly about 34,000 tons in 1995 as motor vehicle production dips and the U.S. economy turns somewhat downward.

The short-term forecast for aluminum die castings shows a slight drop-off in shipments in 1995 to 956,000 tons, compared with the 984,000 tons shipped in '94. The 678,000 tons of permanent mold and sand-cast aluminum shipped last year are also expected to drop off slightly to 672,000 tons in '95.

Motor Vehicles - Aluminum castings in automotive applications increased at a rapid rate during the late 1970s and early '80s to over 100 lb per car. The present average weight per vehicle is 145 lb per vehicle.

Aluminum casting use in motor vehicles is forecasted to continue increasing in the longterm. Based on interviews with key personnel at domestic OEM and transplant companies, the following forecast for the use of aluminum castings in passenger cars and light trucks has been made.

Aluminum Castings(*) as a Percent of Total Units Produced in the U.S.

Part                      1995     1999

Engine Block              10%      25%
Cylinder Head             37%      80%
Intake Manifold           75%      70%
Transmission Case         90%      92%
Wheels                    38%      52%
Brake/Suspension Parts     0.2%     5%

* includes aluminum cast metal matrix composites

Internal Combustion Engines - Some 92,000 tons of aluminum castings were shipped to this end-use market last year. The long-term outlook for this market calls for a 3.1% annual growth rate through the end of the decade. The total aluminum casting weight in small gasoline engines is distributed as follows: blocks 38%; heads 20%; pistons 21%; housings/oil pans 11%; rocker arm covers, manifolds and others 10%.

Office Machines & Computers - The long-term decline in mainframe computer production between 1994 and 2004 is forecasted at 3.5% per year. Typewriter growth, on the other hand, is 0.5% per year, Aluminum casting consumption in this industry reached 80,000 tons in 1994 but is expected to decline at a 3% annual rate in the long term.

Motors & Generators - In 1995 aluminum die castings are expected to increase 4% over 1994 to 27,000 tons in this market sector.

Aircraft - The decline of aircraft production continues, dropping aluminum casting shipments in this industry to 54,000 tons in 1995 and 50,000 tons in 1996, half of the 1989 production.

Brass, Bronze & Copper-Base

The major growth area for copper-base castings is in industrial valves and fittings, which are forecasted to grow 1.2% per year through the rest of the decade. The 1995 forecast calls for shipments of 99,000 tons, the same as for 1994. The relatively high price of copper, in many cases, has helped force substitution by plastics and other metals. However, brass and bronze castings are holding on to most of their major applications.

The plumbing fitting market for shower, sink and drainage parts is 59,000 tons in both 1994 and 1995. However, a long-term decline is expected in these areas. Growth markets for copper-base castings include marine hardware, pumps and ball bearings.

Zinc Die Castings

Shipments of zinc die castings reached 398,000 tons in 1994. The major use of diecast zinc continues to be in motor vehicles, However, this market is expected to slip to 150,000 tons in 1995. The only major market for zinc die castings that continues to hold up are hardware and builders tools and plumbing fixture sectors. About 112,000 tons are expected for 1995,

Magnesium

A total of 31,000 tons of magnesium die castings are expected to be shipped in 1995. Based on interviews with major automobile manufacturers, it is expected that magnesium diecasting applications will double during the next 10 years from the 11,000 tons forecasted for this market sector in 1995.

At present, there are 24 parts of motor vehicles made of magnesium die castings. In the future, it is forecasted that such parts as wheels, pistons, intake manifolds, rocker arm covers and transmission cases will also be produced in magnesium.

Investment Castings

Some 153,000 tons of investment castings were shipped in 1994. Their major commercial applications continue to be valves. In 1995, shipments of investment cast carbon and stainless steels will approach 50,000 tons with a 3% per year growth forecasted.

Aircraft applications - such as blades and vanes for engines, aircraft frame parts, and aerospace and missile parts - have declined as federal spending has been cut, particularly in defense programs. Cast blade and vanes in 1995 are expected to drop to 9000 tons.

Casting Supply

In 1955 there were 6150 foundries in the U.S. In 1995, the total number has been reduced to 2995. The forecasted breakdown of capacity in 1995 is shown below.

Metal Capacity              tons

Iron                     12,750,000
Steel                     1,520,000
Aluminum                  2,100,000
Copper-Base                 400,000
Magnesium                    40,000
Zinc                        440,000
Other Nonferrous             70,000
Investment Casting          200,000

TOTAL                    17,520,000

Forecasted 1995 casting production is 13.9 million tons, a utilization rate of 79%.