Expansion slows, some areas strong.

Interviews with users indicate continued expansion in many high-production casting market sectors, while shipments are declining among many jobbing foundries producing iron and steel castings. While estimates still call for an overall good year, ductile iron [TABULAR DATA FOR TABLE 1 OMITTED] and aluminum are the only sectors expected to exceed last year's totals.

Shortages of U.S. supply (Table 1) in key high-casting-demand market sectors invite imports. Potential shortages of capacity exist in high-production gray and ductile iron in the 0-50 lb range and permanent mold aluminum. For many foundries servicing low- and medium-quantity casting markets, capacity utilization is expected to drop into the 70% range.

Described below are estimates on how 1999 looks for each of the major cast metal groups.

Gray Iron

Gray iron is forecast to fall 2% to 5.9 million tons in '99, due to automotive conversions to aluminum and large declines in several machinery sectors.

Motor Vehicle - Strong demand for high-production brake castings continues, while shipments of iron blocks, heads and other engine castings decline. Despite an expected 3% increase of light vehicle production in '99, the 6% reduction in gray iron per light vehicle to 300 lb may result in a loss of 49,000 tons. High light truck sales has postponed the conversion of engine blocks to aluminum. Medium to heavy truck production should exceed '98's peak year by 9%, increasing shipments to this market to 242,000 tons, primarily due for brake drums and rotors.

Internal Combustion Engines - Maximized diesel engine production for trucks, tractors and off-road construction equipment is expected to consume 530,000 tons of gray iron. U.S. capacity shortages have increased imports to 125,000 tons/year.

Machine Tool - U.S. demand for machine tool and metalworking machinery continues to decrease, causing a 12% decline in casting shipments to 115,000 tons.

Special Industry Machinery - Declines in textile, paper/printing and other special industry machinery has lowered shipments from many U.S. jobbing foundries. Forecasts have been reduced 2% to 210,000 tons for '99.

Farm Machinery and Equipment - Although the 1st quarter exceeded forecasts, manufacturers expect a 13% decline in tractor shipments along with reductions in the related equipment. Gray iron shipment forecasts for '99 are reduced to 340,000 tons, with a continued loss to 325,000 tons in 2000.

Ductile Iron

Shipments of ductile iron are expected to increase approximately 1.3% to 4.25 million tons in '99.

Motor Vehicle - Record ductile iron consumption in motor vehicles was spurred by increased production of light trucks. High-production foundries are at record utilization rates. About 1.1 million tons of ductile iron is to be consumed in passenger cars and light trucks in the U.S.

Pipe - Pipe shipments (43% of the total ductile iron market) are expected to again reach 1.8 million tons. Despite a 0.8% loss/year to PVC pipe, a 2.6% annual long-term growth rate in pipe shipments is expected.

Valves and Fittings - Another strong year is expected with shipments estimated at 230,000 tons, led by usage in pipeline and water handling systems.

Farm Machinery - The market decline could lead to a 11% decline in ductile iron shipments to 120,000 tons.

Construction Machinery and Equipment - Ductile iron shipments are expected to decrease slightly to 172,000 tons. Despite a forecast increase in construction activity, a loss in exports of construction equipment has affected casting demand.

Special Industry Machinery - A 2% loss of shipments is forecast vs. '98.

Steel

Despite another healthy year for railroad casting shipments, steel castings are expected to decline 4% to 1.53 million tons in '99.

Railroad - The expected production of 71,000 freight cars points to another good year. Railroad castings (wheels, bolsters, side frames, couplers and yokes - primarily in the 100-1000 lb casting range) are forecast to reach 800,000 tons, only 5% below the '98 peak year.

Mining Machinery and Equipment - A second successive down year in mining machinery shipments is expected to lower '99 steel casting shipments to 110,000 tons, including carbon, low alloy, heat-resistant, manganese and wear-resistant steels.

Carbon Steel - Shipments are forecast to decline 4% to 1.35 million tons. The major losses are felt by jobbing foundries producing construction, mining and special machinery castings. A slight lowering of valve and pump casting shipments also is expected.

Aluminum

Shipments of aluminum castings are expected to increase 6.5% in '99 to a peak level of 1.9 million tons.

Motor Vehicle - Consumption of aluminum castings has reached 1 million tons for the first time. Based on present demand and supply conditions a domestic shortage exists for aluminum permanent mold engine block and head castings.

Other

In other nonferrous trends, brass/bronze shipments may drop 4.3% from '98, while zinc falls 2.6%. Magnesium shipments are expected to grow 13% over last year's totals. Investment casting shipments are expected to grow 1.2%.

The AFS Metalcasting Trends newsletter distributed to AFS Corporate Members includes an explanation of the new North American Industry Classification System (NAICS), which Stratecasts will employ as a replacement to the Standard Industrial Classification (SIC) system. Information is available from the modern casting web site at www.moderncasting.com.