Aluminum shows positive trends; steel performance improves.

Part two of this series looks at the prospects for nonferrous, steel and investment castings as well as the role of exports and imports.

In Part 1 of this series, we noted that iron casting shipments generally showed recovery signs in the fourth quarter of 1992, paralleling an increase in almost every manufacturing segment.

Despite continued foreign competition and shifting demands favoring some metals over others, 1993 begins on a note of confidence that recovery is under way. Even though all foundries won't benefit at the same rate, improved domestic demand, weakening import pressures and growing U.S. exports spell improved plant use and, ultimately, a stronger bottom line.

Aluminum Outlook

Aluminum casting shipments, down to 1.1 million tons in 1991, recovered in 1992 to 1.3 million, and should reach more than 1.5 million tons in 1993 (Fig. 1). Motor vehicles consume 50% of aluminum casting shipments and continue to add aluminum applications. Passenger cars and light trucks average 140 lb of aluminum castings per vehicle and are forecasted to grow to 180 lb by 1998.

Motor Vehicles - Aluminum castings in motor vehicles increased rapidly in the late 1970s and early 1980s, using more than 100 lb/car. Aluminum motor vehicle casting shipments should increase from 631,000 tons in 1992 to 793,000 tons in 1993 and grow to 982,000 tons in 2002, an increase of 4.5% a year. This translates to about 150 lb per car and light truck by 1994 and 180 lb by 1998. It is forecasted that 57% of this weight will be in die castings, with the balance in permanent mold and sand castings. Diecast aluminum in motor vehicles will increase from 385,000 tons in 1992 to 480,000 tons in 1993. Factors contributing to this growth include: * Aluminum is replacing cast iron to

reduce vehicle weight to lower fuel

consumption in compliance with

CAFE standards and also to meet foreign

competition. * Low-pressure permanent molded aluminum

wheels will grow to 15 million

tons a year and, by 1998, be on 35% of

U.S. passenger cars and light trucks. * Cast aluminum heads will be used on

about 30% of automotive engines in

1993 and reach 10 million heads a

year by 1998. * Aluminum engine blocks are expected

to be specified for 10% of the

total blocks made in the U.S. by 1994,

increasing to 30% by 1998. * Aluminum is used in virtually all U.S.

manufactured engines for pistons and

transmission cases. * Aluminum metal matrix composites 

(MMC) castings are being tested in

calipers, rotors and suspension parts.

In 1993, a surplus of diecasting facilities will exist for automotive castings. If plant closings continue because of inefficiency, expansion must take place to meet demands or by 1994, producers will need to depend on offshore suppliers. The expanding U.S. export market may also result in further domestic shortage. In 1992, about 20,000 tons of additional capacity came on line in the U.S.

A surplus is forecasted for permanent mold aluminum for automotive production. The growth of 5.5% annually in automotive PM aluminum between 1992 and 2002 could create a shortage of automotive aluminum, especially if head and block forecasts are realized.

Aircraft - Aluminum aircraft casting shipments should climb from 100,000 tons in '92 to 112,000 tons in '93, leveling off at or near 1.5% a year in long-term growth. Cuts in defense spending will lower military and aerospace shipments throughout the decade, though demand continues for commercial airline and general aviation aircraft and equipment. Space exploration and commercialization face uncertain government funding and highly speculative demand. Some aircraft demands will grow while others face market maturation and severe international competition.

Office Equipment - Photocopying equipment is a major application for permanent mold and diecast aluminum castings, using 15,000 tons of aluminum castings in 1992. Most of this was in large sand casting for bases and pedestals, which is expected to grow at 5% annually. Some 80,000 tons of aluminum were used to make instruments.

Computers - Current trends suggest that U.S. firms will gain almost 50% of their worldwide revenues by 1996 from systems design and integration, software and after-sales service. Computer equipment revenue will come largely from workstations and personal computers. Aluminum casting shipments for computer and office equipment should achieve 75% of the forecasted growth or 3% a year. Casting shipments are forecasted to rise from 95,000 tons in 1992 to 130,000 tons by 2002, an annual increase of 3.2%. Die castings will account for about 85% of this growth.

Electric Motors - An annual demand growth of 1.4% is expected for aluminum die castings for motors, which will replace cast iron in small motors and frames, and bronze in switch gear. Aluminum, however, will continue to lose market share to Far East competitors.

Engines - Aluminum castings will rise from 80,000 tons in 1992 to 105,000 tons in 2002, an annual growth rate of 2.8%. This compares with the expected annual growth of the small gasoline engine market, which is primarily dependent on the growth of lawn and garden equipment and sport vehicles. Aluminum, also used in diesel engine castings, is forecasted to replace iron in gear housings and other engine castings.

Power Tools - Aluminum die castings are expected to reach 30,000 tons in 1993 for power-driven hand tools. Rising demand and increased exports of cordless tools will benefit the industry. The forecasted long-term growth in this industry is 2.8% a year for die castings with little growth for sand castings.

Other Markets - The meters and controls industry will use 15,000 tons of aluminum castings in 1993, mostly as die castings - a gain of 4% over 1992. Air conditioning, heating and refrigeration industry shipments are projected at about 1.9% through 1996, primarily for compressor bodies and housings in room air conditioners. The forecasted annual growth from 1992-2002 is 3.3%, paralleling the industry's growth. Use in automotive air conditioners will be lower than for stationary units.

Copper-Base

The demand for brass, bronze and copper-base castings is expected to climb from 292,000 tons in 1992 to 313,000 tons in 1993. Long-term growth is 0.2%.

U.S. brass and bronze casting shipments depend predominantly on the markets for plumbing, sanitary and industrial fittings and valves. Based on the expected increase in housing starts and building activity, these markets are expected to increase by 7% in 1993. Total production of cast fittings and valves should reach 163,000 tons in 1993; total shipments estimated at 313,000 tons.

Bronze castings for pipe fittings, shower fixtures, faucet and sink parts, drainage and other uses have recovered from the 1982 low of 36,000 tons to 55,000 tons in 1992, and should rise to 66,000 tons in 1993. A long-term rate of decline of 0.6% a year is forecasted from 1992, based on a 3% annual loss of market to plastics and wrought copper alloy fittings and fixtures.

The brass casting fitting market should rise to 110,000 tons in 2002, a 1.3% growth rate, based on replacement by other metals and plastics. A large decrease in imports should dictate a net growth.

Because of previous high copper prices, many applications were engineered away from bronze to Teflon-lined ductile iron, stainless steel, Ni-Resist and plastic. A growth market is in nickel-aluminum bronze for marine and shipboard valves.

The market for copper-base castings in pumps and impellers is forecasted to increase from 15,000 tons in 1992 to 16,000 tons in 1993. With copper prices near $0.90/lb, other metals and nonmetallics with equivalent or better properties will become competitive.

Magnesium Growth

The use of magnesium die castings continues to grow rapidly as new automotive applications are developed to reduce weight. Despite a higher price than aluminum, magnesium use is growing. The following factors are paramount when designing from aluminum to magnesium: price and weight differentials; safety in manufacturing; galvanic corrosion and strength. With aluminum prices rising, magnesium substitutions will be made in specific automotive applications.

Based on present research and forecasts, a rise of 5.1% annually is projected - to a high of 28,000 tons in 2002. Significant price reductions could alter this forecast. The main surge in growth is expected in 1995.

Fishing equipment recently has been a main user of magnesium die castings. Stabilized prices will stimulate use to replace plastics and aluminum. A forecasted 3.4% annual growth rate will drive demand to 7000 tons a year.

Magnesium castings for chain saws have been strong despite magnesium price increases. Shipments will grow at a rate of 3.6% annually from 1992-2002, exceeding the chain saw industry growth pace, and could reach 50,000 tons by the end of the decade.

Zinc: Sluggish at Best

The use of zinc die castings in vehicles has decreased from nearly 60 lb a car and light truck to 34 lb, and a further decline to 15 lb is expected. Based on the standard small car mix, the average weight per vehicle will fall to 12 lb by 2002.

The loss of weight per car is predicted on the basis of lighter-weight zinc castings and the substitution of plastics, aluminum and magnesium for handles, locks, trim, lighting, panel fixtures and other components. Zinc diecasting shipments should stay near 325,000 tons in '93, despite higher vehicle production.

Stool Improves

Shipments of carbon and low-alloy steel castings (Fig. 2) are projected to increase 7% in 1993 to 1,016,000 tons.

Railroad - The railroad industry historically has represented nearly half of the steel casting market, divided among freight car set castings (carbon steel), locomotive and transit parts (low-alloy steel) and track work (manganese steel).

The freight car market is the most significant steel casting barometer. Carbon and low-alloy castings are projected to show a slight growth from 470,000 tons in 1992 to 500,000 tons in 1993, based on the delivery of more than 30,000 freight cars.

Values - For many years, the steel valve market was plagued by severe foreign competitors who reportedly supplied nearly 58% of the market, with Japan as the main exporter. Also high were Spain, Portugal, Italy, France, Taiwan, Mexico and South Africa. Imported valves were sold at prices 15-20% less than domestic ones and considered to be at "dumping" levels. A strongeryen has decreased Japanese participation; Korea and Brazil continue to export, but total imports decreased to 15% in 1992.

Carbon steel valve shipments should rise from 67,000 tons in '92 to 73,000 tons in '93, up 9%. Market conditions are a function of petroleum production, power generation, oil and gas transmission, chemical and water and sewer markets. Water and sewer castings are a function of housing starts, which have been poor. The valve market also serves other markets, such as gas distribution, synfuel processing, iron and steel production, pulp and paper, marine, commercial construction and foods and beverages.

Turbines - Carbon steel turbine castings will grow 0.7% annually as utility purchases increase and foreign competition decreases.

Construction Machinery - The construction machinery and equipment market continues to offer a significant market for steel castings. Carbon and low-alloy steel castings are forecast to decline from 139,000 tons in 1992 to 130,000 tons in 2002. However, an increase to 145,000 tons in 1993 is projected. Rear-end housings on some off-road equipment will be replaced by ductile iron, thus creating a market decline for larger castings.

Mining - Shipments are expected to increase from 87,000 tons of steel castings in 1992 to 94,000 tons in 2002, based on rises in specialized mining machines, equipment and repair parts, ore dressing and coal preparation equipment, excavating and crushing machinery, stationary crushing and pulverizing equipment.

Stainless Steel - The forecast for shipments of corrosion-resistant stainless steel castings shows gains from 61,000 tons in 1992 to 69,000 tons in 1993 with valve and pump consumption leading the way. Valve growth will parallel the forecasted 1993 growth of the petrochemical and chemical industries.

Cast stainless is also being specified for use in waste handling systems. The 300 and 400 series stainless are showing gains in deep drilling and offshore drilling in salt water and in caustic, hydrogen sulfide and carbon dioxide environments at high pressures/temperatures.

As the oil drilling industry recovers and grows, stainless steel also will grow to fulfill immediate requirements, with the biggest gains in pressure vessels, valves and pumps. Centrifugally cast stainless pipe and tubing are growing markets for many special industry machinery applications where statically cast stainless valves and pumps are being used. Static castings are for special use in food product, refining and chemical industries. Shipments of corrosion-resistant steel castings should rise from 12,000 tons in '92 to 14,000 tons in 2002.

Shipments of stainless steel castings for the pump industry will grow from 11,000 tons in 1992 to 13,000 tons in 1993.

Heat-resistant steel castings are projected to increase from 28,500 tons in 1992 to 30,000 tons in 1993. Statically and centrifugal cast heat-resistant alloys are used mainly in heat treat furnaces, ovens and as reformer and radiant tubes.

Investment Castings

Investment casting shipments are projected to grow from 151,000 tons in 1992 to 187,000 tons in 2002, a compounded annual growth rate of 2.2% a year. Shipments in 1993 should reach 166,000 tons, a 10% increase over 1992.

The fastest-growing market is in stainless steel valves for corrosion-resistant applications in chemical, petrochemical, food products and other corrosive environments. Casting valve bodies and parts using the investment process offers reduced costs, since close-tolerance casting eliminates machining. The ability to cast valve parts in casting weights to 500 lb in the shell investment process offers greater incentives to redesign larger valve bodies, bonnets and trim to achieve machining cost reductions.

Investment cast valves are forecast to grow 4.6% annually from 1992-2002. Growth to 80,000 tons in 1998 will make the valve market 40% of the total investment casting industry.

Investment cast blades and vanes comprise about 20% of industry's dollar value. Aircraft engine parts are cast in superalloys such as nickel-based alloy 713C, Rene 80, B1900 P&W, Mar-M-246 and 718. Investment cast superalloy shipments for blades and vanes, dependent on the missile and aircraft business, should grow 2.4% annually from 1992 to 14,000 tons in 2002 - a sales value of $300 million. Stainless and carbon steel investment castings, used in aircraft frames, instruments and fuel systems, are forecast to grow to 10,000 tons in 2002.

1993 and Beyond

Based on current U.S. economic forecasts and recoveries in the EC countries and Japan, peak years for metalcasting production should be 1994 and 1995, with all metals gaining in the short term.

In the long term, technology and global and environmental conditions will treat each metal differently. Total growth of metalcasting shipments into the next century are forecasted at 0.8% annual growth rate. The progress or lack of it for some metals is worthy of note: * ductile iron approaching gray iron at

4.5 million tons; * malleable iron falling to 60,000 tons; * aluminum nearing 2 million tons; * magnesium reaching 50,000 tons; * investment castings exceeding

200,000 tons; * stainless steel castings topping

100,000 tons.

Individual market niches will be affected by global changes. Foundries of all sizes producing varied product mixes and foundry equipment and supply companies must be ready to react to and take advantage of these changes.