Forecast shows 5.1% shipment increase in '04, 18% demand jump by '09: a study of end-use market shows an expansion in casting shipments for 2004 with considerable gains in aluminum and steel.

Though motor vehicle production in the U.S. dropped slightly in 2003, casting shipments as a whole rose 3.6%. The rebound for the foundry industry from two recession years began to take place in many market sectors in the second half of the year. and is expected to accelerate in 2004 and continue to grow in subsequent years, despite heavy pressure from imports. Though the demand for castings is forecast to rebound sharply in 2004, and in subsequent years, imports are to rise to new highs and keep the expansion of shipments by domestic foundries at modest levels.

Interviews of end-users of castings and analyses of econometric forecasts supports the optimism for a solid recovery in casting demand for the next five years. Many of these consumers of castings have fostered the increase in imports by forcing foreign exporters to supply castings at below normal prices, and often at price levels that can he described as "dumping."

It is expected that our industry will be able to mirror the steel industry in its fight for competitive fairness, and be able to utilize its superiority in productivity to regain competitiveness in the future. This forecast reflects that some government action would occur over a period of time, but probably not in the immediate future. In order for our domestic industry to take advantage of the predicted peak spending years of the baby boomers and immigrant populations in the U.S., the capability to compete must be restored. This forecast predicts an increase in imports at approximately 5% per year through 2013 coupled with a slight increase in exports.

Technological and material changes in many casting applications in various market sectors also have caused significant shift in casting demand and supply picture. Metalcasters producing light metal castings are expected to grow rapidly as applications increase, while iron casting uses decline, forcing closings and shifts in operating practices tot many foundries. Gray iron castings in particular are forecast to decline as casting applications are moved to other metals and materials.

The year 2003 was difficult for the foundry industry because of the continued recessive activity of casting consuming industries. The production of light vehicles turned down slightly while medium-to-heavy truck production did not recover as predicted for a third consecutive poor year. The production of heavy machinery also continued downward. The overall increase in shipments in 2003 over 2002 was due to increases in the demand for castings in such industries as construction, refrigeration, railroad and internal combustion engines, and in valve and fitting applications.

Metal casting shipments

Casting shipments are forecast to increase 5.1% to 14,262,000 tons in 2004, and increase at a long term rate of 1.2% from 2003 to 15,307.000 tons in 2013 (Fig. 1).

[FIGURE 1 OMITTED]

Subsequent to the forecasted growth in 2004, expansion of the consumption of metal castings in the U.S. is predicted to rise slowly each year to a peak of 16 million tons in 2009, a growth of only 0.5% per year over 1999. Sales of metal castings, which dropped to $27.2 billion in 2001, are forecast to rise to $32.8 billion in 2004 and to $39.6 billion in 2007.

FERROUS CASTING SHIPMENTS

Shipments of ferrous castings are forecast to rise from 10.37 million tons in 2003 to 11/1 million tons in 2013, an annual growth rate of 1.0%. Ferrous casting sales are forecast to grow to $18.8 billion in 2013.

Gray Iron--After shipments dropped to a new low in 2003, gray iron foundries as a whole are not expected to gain in shipments in 2004, though consumption in some market sectors is expected to expand slightly. A long-term decline of 0.1% per year is forecast. Gray iron sales fell to $4.9 billion in 2003 and are expected to rise to $5.2 billion in 2004. Iron foundry capacity utilization is forecast at 81% in 2004, as capacity is lowered due to closings in the past two years.

The forecasted long-term growth and declining markets is summarized in Table 1.

Ductile Iron--Ductile iron casting shipments are forecast to rise 5.7% in 2004 to 4,271,000 tons, and grow in the long term at a rate of 1.6% annually to 5,031,000 tons in 2013. Sales are predicted to increase to $5.8 billion in 2004, and grow in the long term to $7.7 billion. Despite plant closings last year, utilization of capacity is not expected to exceed 81% in 2004.

Table 2 provides a summary of long term growth and declining markets for ductile iron.

Cast Steel--Steel casting shipments are forecast to rise 13.5% in 2004 to 1.25 million tons, based on the expected increase in railroad freight car deliveries to 35,000 units. Increases in the deliveries of freight cars are forecast for 2005 and 2006 and should spur further increases in steel casting shipments. Based on these expectations, capacity utilization is forecast to reach 83%.

Table 3 summarizes the reasons for casting growth in some special market sectors.

NONFERROUS CASTING SHIPMENTS

Shipments of nonferrous castings are forecast to rise at an annual rate of 2.0%, from 3,042,000 tons in 2003 to 3,715,000 in 2013. Nonferrous casting sales are forecast to grow from $13 billion in 2003 to $20 billion in 2013.

Aluminum--Casting shipments are forecast to grow 7.1% in 2004 to 2,409,000 tons, while growing annually at a rate of 2.0% to 2.7 million tons in 2013. A peak year of 2.8 million tons is forecast for 2008. Sales are expected to rise to $10.7 billion, and capacity utilization is predicted to rise to 83%, in 2004.

The growth and declining rates for cast aluminum in specific market sectors are provided in Table 4.

Copper-Base--Shipments of brass and bronze castings are forecast to grow 5.6% in 2004 to 321,000 tons. Long-term growth is forecast at 0.9% annually to 332,000 tons, with sales at $l.58 billion.

Table 5 summarizes the growth and decline in specific copper-base market sectors.

FORECAST BY END-USE INDUSTRIES

The end-use industries that consume metal castings are classified by the new Noah American Industry Classification System (NAICS), which has replaced the Standard Industrial Classification System (SIC).

The macro-economic forecasts, which are used as a basis for all shipment forecasts, are based on the analysis of information supplied by econometric specialists, government agencies and other major institutions throughout the country. These forecasts are based on the estimates of individuals. As a result, unforeseen occurrences and happenings in the world can be responsible for major changes. Though Stratecasts cannot be held responsible for such changes and is not responsible for the opinions and forecasts expressed in this report, its model attempts to define the economical and technical basis for individual forecasts and continually updates the forecasts to respond to changes.

Casting shipment forecasts are based primarily on the individual analysis of each end-use industry from both an economic and technological viewpoint. Although each individual category has its own distinct forecast based on individual input/output analysis as well as economical and technological analyses, all are subject to the 2003, 2004 and 2003-2013 macro economical forecasts.

Market outlooks and the respective casting shipment forecast for the major casting consuming markets for 2004 and beyond follows.

Motor Vehicles

The production of light vehicles in the U.S., which includes both passenger cars and light trucks, dropped 11% in 2001 to 11,040,000 vehicles and rose to 12,080,000 vehicles in 2002. Based on the analysis of the year-to-date production at the end of the third quarter of 2003, light vehicle production is forecast to decrease to 12,010,000 vehicles for the year. Production is expected to increase to 13,200,000 in 2004 and rise at an annual rate of 1.2% per year. Peak production of 14,300,000 light vehicles is forecast in 2008.

Environmental regulations may well be the key factor that dictates how metal castings are used for different parts of the vehicles. Clean air standards in most states are expected to become more stringent in the future and require lighter vehicles. The following are some of the factors that could influence the automobile industry in 2004 and in the future.

* percentage of light trucks to remain high but drop slightly from 61% to 55%;

* foreign transplants expected to gain market share in the future and replace a share of imports;

* transplants to increase production of light vehicles in the U.S. from 2.6 million in 2003 to 3.2 million in 2006, with much of this coming at the expense of imports;

* growth of light vehicle production in the U.S. at a normal 1.2% per year rate for the long term coupled with transplant replacement of about 600,000 imports is predicted to spur light vehicle production to 14.4 million;

* imports expected to decrease as the Yen and Euro remain strong and domestic production by transplants increase. A weak Yen could change this situation;

* new highway construction to increase;

* baby boomer and immigrant population spending to peak in 2005 and 2006;

* worldwide economic recovery;

* worldwide over-capacity of automobile manufacturing;

* proposed more stringent emission and safety regulation and corporate average fuel economy (CAFE) regulations;

* new types of fuel leading to powertrain changes.

Forecast--Shipments of gray iron castings for light vehicles are to decline to 1,175,000 in 2004 and at a long term rate of 1.4% annually from 1,236,000 tons in 2003 to 1,069,000 tons in 2013. Ductile iron shipments are expected to remain at 1.1 million in 2004. A loss of 0.6% per year is forecast, dropping shipments in 2013 to 1.0 million tons. Carbon and low alloy steel castings in tracks, trailers and buses, including military vehicles, are forecast to increase to 62,000 tons in 2004. A decrease to 40,000 tons in the long term is forecast.

Aluminum casting shipments are forecast to increase from 1,411,000 tons in 2003 to 1,512,000 tons in 2004. Over the long term, an increase to 1,739,000 tons by 2013 is forecast at an annual growth rate of 2.1%. Magnesium die casting usage is forecast to increase from 72,000 tons in 2003 to 250,000 tons in 2013, a growth rate of 13.3% per year. It is estimated that shipments will reach 100,000 tons in 2004.

Internal Combustion Engines

This classification includes diesel and small gasoline engines primarily engaged in manufacturing diesel, semi-diesel and other internal combustion engines for stationary, marine, tractor and other uses, but does not include engines used in aircraft and light vehicles.

It is estimated that the diesel engine market consumes 90% of the gray and ductile iron castings shipped to this classification. The small gasoline engine market consumes only 10% of the iron casting market but constitutes nearly 90% of the aluminum casting market.

Forecast--Shipments of gray iron castings are forecast to grow to 428,000 tons in 2004, and to 470,000 tons in 2009. Ductile iron castings are forecast to increase from 84,000 tons in 2003 to 103,000 tons in 2004. A long-term growth in shipments to 126,000 tons is forecast for 2008. The use of carbon and low alloy steel castings in the turbine and turbine generator industries is forecast to grow at a rate of 0.6% per year from a tonnage of 16,000 in 2003 to 17,000 tons in 2004 and to 20,000 tons by 2009.

Aluminum castings in engines are forecast to increase from 112,000 tons in 2003 to 140,000 tons in 2013, an annual growth rate of 2.4%. Aluminum die casting shipments, which represent 70% of the total aluminum in this sector, are forecast at 87,000 tons in 2004.

Agricultural Implement Manufacturing

Though total farm machinery sales reported by the Bureau of Census increased 10% in 2002 over 2001, the equipment using castings, such as four wheel drive tractors, decreased 3%. An increase in 2003 of 5% is forecast followed by a 3% rise in 2004. A long-term gain of 2.8% per year is predicted.

Forecast--Gray iron casting consumption (exclusive of engine castings) is forecast to increase from 295,000 tons in 2003 to 314,000 tons in 2004. Over the long term, it is expected to rise annually by 1.1% to 345,000 tons by 2013. Ductile iron castings are forecast to increase from 115,000 tons in 2003 to 124,000 tons in 2004 and grow in the next 10 years to 145,000 tons, an annual growth rate of 2.3%.

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 in housing starts, building construction and public works, including highway, airports and water and sewer projects.

Forecast--Gray iron casting shipments are forecast to grow in 2004 to 250,000 tons and grow in the long term at a rate of 1.6% per year to 275,000 tons in 2013. Ductile iron castings are forecast to increase to 203,000 tons in 2004 and grow at an annual rate of 2.8%. The growth of carbon steel castings from 172,000 tons in 2003 to 202,000 tons in 2013 is at the low rate of 1.6% per year due to the substitution of ductile iron for many applications.

Mining Machinery & Equipment

In 2002, the value of shipments of selected types of mining machinery decreased 14.4% versus 2001. Only underground mining machinery rose while portable crushing, screening and pulverizing equipment declined from 18-20% in value. In 2004, shipments of mining machinery in the U.S. are expected to rise 15% after 5 years of losses. A long-term growth of 2% per year is forecast.

Forecast--After five years of relatively low demand, steel casting shipments for use in mining machinery are forecast to rise 20% in 2004 to 142,000 tons. Long-term growth is forecast at 1.9% per year.

Oil Field Equipment

Continuing high oil prices are expected to spur the manufacture of oil field machinery and equipment in 2004. An increase of 8% in production is forecast for 2004, followed by a ten-year growth of 2% annually.

Forecast--Shipments of ductile iron castings for use in off field equipment are forecast to increase l0% to 73,000 tons in 2004. Growth to 95,000 tons by 2009 is predicted. Shipments of carbon, low alloy and corrosion resistant steel castings are forecast to increase to 44,000 and 8,000 tons respectively in 2004 and reach a peak in 2009 at 60,000 tons.

Valves & Fittings Valves and fittings in this classification are primarily composed of establishments engaged in the manufacturing of valves for controlling the flow of liquids or gases in pipes and mains. The valve and fitting market is extremely fragmented with more than 600 establishments in the U.S. Industrial valve shipments declined 3% in 2002, the fourth consecutive year of decline. Industry shipments are projected to show an average annual increase of 2.7%.

Imports continue to exceed exports by 25%, despite the fact that exports of valves for oil industries have grown annually.

The total industry shipments in 2004, measured in constant dollars, are expected to increase as housing starts rise, The strongest increase in demand is expected to come from energy related industries, such as the growing chemical and power generation industries.

Forecast--Gray iron castings are forecast to increase from 263,000 tons in 2003 to 272,000 tons in 2004 and grow in the long term to 300,000 tons in the expected peak years of 2005-08. Ductile iron shipments are expected to increase from 216,000 tons in 2003 to 222,000 tons in 2004 and grow at an annual rate of 2.1% to 2013.

Carbon and low alloy steel castings for valve applications are forecast to increase from 67,000 tons to 77,000 tons from 2003-13, an annual growth rate of 1.4%. Corrosion resistant steel valve casting shipments composed of stain less steel and high alloy castings are forecast to increase from 26,000 tons in 2003 to 32,000 tons in 2013, a 2.1% long term annual growth rate. Stainless steel valve production is expected to parallel the growth of durable goods used in the petrochemical and chemical industries (estimated at 3% annually).

The long-term copper-base casting growth forecast has now been reduced to 1.0% per year. The use of nickel-base castings in valves is forecast to grow from 13,000 tons in 2003 to 17,000 tons by 2013. Following a series of poor years from 1999 to 2002, investment cast valves of stainless, carbon and low alloy steels and nonferrous alloys are expected to increase from 45,000 tons of shipments in 2003 to 55,000 tons in 2013, an annual growth rate of 2.1%.

Pressure Pipe

Forecast--Ductile iron pipe is forecast to increase from 1.94 million tons in 2003 to 2.06 million tons in 2004, and grow at an annual rate of 2.3% to reach 2.4 million tons in 2013.

Metalworking Machinery & Equipment

The machine tool industry in the U.S. has declined 60% in value of shipments in the last 5 years. The bottom is believed to have been reached, and is expected to grow slightly over the next 10 years at a rate of 2.0% annually.

Forecast--Gray iron shipments are expected to begin to rise 6% in 2004 and continue to increase to 67,000 tons in the next 5 years. The use of ductile iron and steel in roll making equipment will decline to the 10,000- to 16,000 ton levels because of the decreased demand in steel making by integrated mills in the U.S.

Power Hand Tools

The use of castings in power tools dropped 12% in 2001 followed by 5.5% per year increases in '02 and '03. Over the long term, a 1.0% annual rate of growth is forecast.

Forecast--A continuous yearly increase is forecast for aluminum castings with a peak of 45,000 tons in 2007. Magnesium sand casting shipments have declined slightly to 10,000 tons, but are forecast to grow to a peak of 14,000 tons in 2009.

Special Industry Machinery

The five industries that have the most impact on this market sector are the food products, paper, printing, textile and packaging industries. The classification also includes establishments producing plastic, wood products, rubber, glass and other types of machinery not classified under machine tools. Most of these market sectors dropped by 5% to 15% in 2001 to very low levels.

Forecast--Gray iron casting shipments are expected to grow to 210,000 tons in 2004. Peaks of near 250,000 tons in '07 and '08 are forecast. The forecast for ductile iron indicates an overall growth rate of 3% per year from 2003 to 2013. Corrosion resistant steel casting shipments are forecast to have a long-term growth rate of 2.9%. Heat resistant casting shipments are forecast to grow 2.9% per year to 8000 tons by 2013.

Pumps & Compressors

Shipments by the pump and compressor industries declined in 2001 and 2002 with the downturn in the economy. This market sector is affected by the process industries where pumps and compressors are primarily used to control the flows and pressures of many liquids and gases. They are also vital in chemical, petrochemical, and pulp and paper production. Forecast increases in highway construction, bridge repair and public works is expected to assist the demand for pumps and compressors in 2004. Oil field equipment investment in 2004 also could spur pump growth. Shipments are forecast to increase 5% in 2004. A long-term growth rate of 2.5% per year is predicted.

Forecast--Gray iron castings are expected to grow from 230,000 tons in 2003 to 240,000 tons in 2004. A long-term growth to annual shipments of 270,000 tons is forecast for the latter part of the decade. The consumption of ductile iron increased 5% in 2003 and is forecast to grow another 5% to 86,000 tons in 2004. A long-term growth of 2.3% per year is forecast. Shipments of carbon and low alloy steel castings for pump cases, impellers and other parts are expected to increase 2.0% annually to reach 21,000 tons in 2013. Corrosion resistant steels are expected to show growth from 2003 to 2013 at an annual rate of 2.3%. Shipments of investment castings of primarily stainless steel and high nickel alloys are expected to increase at an annual rate of 2.3% in the long term.

Gears, Speed Changers & Power Transmission Equipment

The industry grew 6% in 2003 from the 2002 low. An additional 6% growth is forecast for 2004.

Forecast--For gray iron, 6% growth is forecast for 2004 to 116,000 tons. Spurred by the growth of austempered ductile iron (ADD as a replacement of forged gears and shafts, growth from 27,000 tons in 2003 to 35,000 tons in 2013 is forecast for ductile iron.

Refrigeration, Air Conditioning & Heating Equipment

In 2002, the value of heat transfer equipment decreased 6%, while condensing units were up 10%. Compressor units dropped 12%, causing casting demand to decline accordingly. A 5% increase in casting applications is forecast for 2004.

Forecast--A 5.7% increase in demand is forecast for 2004 for gray iron followed by 3 straight good years. Ductile iron shipments are forecast to increase from 41,000 tons in 2003 to 52,000 tons in 2013, an increase of 2.4% per year. Aluminum die castings are expected to grow to 49,000 tons in 2004, while permanent mold and sand cast aluminum casting shipments are expected to reach 10,000 tons.

Electrical Equipment 

After six down years, the constant dollar value of shipments by the electrical transmission, distribution and industrial equipment industries is expected to increase 5.0% in 2003 and 7.0% in 2004, and continue to grow at a rate of 2.0% per year based on the growth of housing starts and public works.

Forecast--A continued long-term decline of 3.1% per year is forecast for gray iron castings to bring shipments to 40,000 tons by 2013. Aluminum die castings are forecast to grow at a rote of 1.7% per year based on the expected conversion of iron to aluminum. The use of zinc and lead die casings 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 2004.

Household Appliances

The growth in housing starts in the next few years is expected to spur the growth of appliances by 5% in 2004 and subsequent years

Forecast--A 6.7% per year loss of shipments of gray iron is forecast due to the continued conversion of parts to aluminum and plastic. Aluminum castings are forecast to increase from 68,000 tons in 2003 to 70,000 tons in 2004 and continue to grow to more than 70,000 tons in the next 5 years.

Railroad

Freight car deliveries dropped to a 15-year low in 2002 at 18,000 cars. After an increase to 28,000 cars in 2003, a return to 35,000 in 2004 is forecast. Locomotive production also is expected to rise in the next few years.

Forecast--Carbon steel railroad castings declined in 2003 by nearly 500,000 tons from the 1998 and 1999 highs, causing extremely big losses in steel casting shipments and low utilization of capacity. The rebound in 2003 is expected to continue in subsequent years.

Instruments

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

Forecast--Aluminum casting shipments are expected to increase from 114,000 tons to 137,000 tons in 2013, a 2.3% annual growth rate. Sand cast aluminum, especially in photocopying equipment, is expected to grow and represent more than 55% of the tonnage.

[GRAPHICS OMITTED]

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

NAICS      Industry               AGR *  Forecast Factors

234110     Municipal              +0.4%  Growth in Housing Starts
                                         (+2.7%/yr) Imports at 32%
                                         of Demand

234910     Soil Pipe              -3.8%  Replacement by Plastic

331511     Ingot Molds            -3.5%  Continuous Casting of Steel
                                         at 98% Only Specialty Steels
                                         Use Molds

332998     Sanitary/Radiator      -3.9%  Replacement by Plastic

33291      Valves/Fittings        +1.0%  Growth in Housing Starts
                                         Loss to Plastics and Ductile
                                         Iron Imports at 35% of Demand

333618     Internal Combustion           Dependant on Truck Production
           Engines                +1.1%  Imports More Than 50% of
                                         Demand

33311      Farm Equipment         +1.1%  Growth in Tractor Sales/
                                         Exports Replacement by
                                         Ductile Iron Imports Up

333120     Construction Equip.    +1.6%  Growth in Construction
                                         Activity Exports of
                                         Machinery Increase

333512     Machine Tool           +2.3%  Loss of 60% of Demand
                                         Consumers Move Overseas
                                         Gain From 2003 Low

33329      Special Industry              Loss of Domestic Market
           Machinery              +1.7%  Some Loss to Ductile Iron

33391      Pumps, Compressors     +1.2%  Replacement by Ductile Iron

3334       Refrigeration/AC       +1.5%  Compressors Down
                                         Loss to Imports

333512     Electrical             -6.7%  Loss to Aluminum/Imports

3352       Household Appliance    -3.1%  Loss to Plastics/Light Metals

33611      Light Vehicles         -1.4%  Loss to Light Metals
                                         Loss to Plastic,
                                         Powdered Metals

33612      Medium to Heavy Truck  +3.6%  Growth from Low in 2002/2003

* Average Annual Growth Rate from 2003-13

Table 2. Long-Term Market Summary for    Ductile Iron Castings

NAICS      Industry               AGR *  Forecast Factors

33291      Valves/Fittings        +2.1%  Industry Growth, Imports Up
                                         Replacement of Malleable Iron

532995     Pressure Pipe          +2.3%  Exports Up/Loss to PVC
                                         Growth with Housing Starts

33361      Internal Combustion
           Engines                +2.3%  Replacement of Malleable/
                                         Gray Iron

33311      Farm Equipment         +2.3%  Parallels Industry Growth
                                         Replacement of Gray Iron

333120     Construction Equip.    +2.8%  Replacement of Steel/GI/MI

33329      Special Industry
           Machinery              +2.0%  Replacement of Steel/Gray Iron

33391      Pumps/Compressors      +2.0%  Replacement of Steel

333612     Gears, Power Trans.    +2.5%  ADI Replaces Forgings

336111, 2  Light Vehicles         -1.0%  Loss to Aluminum in Suspension
                                         & Differential Castings ADI
                                         Growth Replace Malleable Iron
                                         Loss of Some Crankshafts to
                                         Forging

336212     Medium to Heavy               Growth from Lows in 2002/2003
           Truck                  +3.0%  Replacement of Steel/Malleable

* Average Annual Growth Rate from 2003-13

Table 3. Long-Term Market Summary for Steel Castings

NAICS      Industry               AGR *  Forecast Factors

33291      Valves/Fittings        +1.6%  Growth in 011. Petroleum,
                                         Power & Chemical Industries
                                         Growth in Stainless
                                         Applications

333120     Construction Equip.    +1.4%  Some Loss to Ductile iron

333131     Mining Machinery       +1.9%  Parallels Industry Growth

333132     Oil Field Equipment    +2.1%  High Oil Prices Spur
                                         Investment

333911     Pumps                  +2.2%  Growth in Stainless, Oil Field

33612      Trucks                 -4.0%  Loss to Ductile iron

3365       Railroad               +3.8%  Rebound in Freight Car
                                         Deliveries

* Average Annual Growth Rate from 2003-13

Table 4. Long-Term Market Summary for Aluminum Castings

NAICS      Industry               AGR *  Forecast Factors

33361      Internal Combustion    +2.4%  Growth in Lawn/Garden
                                         & Sport Engine Vehicles

333991     Power Tools            +1.2%  Loss to Magnesium/Plastics

33341      Computer/Office        -1.9%  Loss to Plastics Machinery

3334       Refrigeration/ AC      +2.6%  Replacement of Gray Iron

334514     Meters & Regulators    +1.1%  Growth in Housing Starts
                                         Loss to Plastics

3352       Household Appliance    +1.0%  Replacement of Gray Iron
                                         Loss to Plastics

3361       Motor Vehicles         +2.1%  Conv. of Blocks, Heads,
                                         Susp. & Diff. Parts To AI
                                         Growth to 270 lbs. of AI/
                                         vehicle Die Castings to
                                         1.0 Million Tons

3364       Aircraft & Parts       +2.3%  Loss to Titanium

3345       Instruments            +2.3%  Parallels Industry Growth

3421       Marine & Other         +3.2%  Growth Market

* Average Annual Growth Rate from 2003-13

Table 5. Long-Term Market Summary for Copper-Base Castings

NAICS      Industry               AGR *  Forecast Factors

332913     Plumbing/Sanitary      -2.6%  Loss to Plastics, Imports

332911     Industrial Valve       +0.5%  Loss to Plastics, Imports

332510     Marine & Other         +2.1%  High Industry Growth

* Average Annual Growth Rate from 2003-13

Capacity Utilization

The foundry industry has undergone a tremendous change in the last 50 years caused by many technological and economic factors. In 1955, there were 6150 foundries in the U.S. It is estimated that the industry will decline to 2,480 foundries in 2004, comprised of 80% with less than 100 employees.

Despite some new and expanded facilities, it is estimated that a loss of casting supply of 255,000 tons is to occur in 2004 vs. 2001. Table 6 indicates the forecast capacity and utilization rates. A total of 3.3 million tons of surplus supply is forecast for 2004 with 2.3 million tons of that in iron foundries.

Table 6. Capacity & Utilization Forecast for 2004

Metal              Capacity(Tons)   Utilization(%)

Iron               11,930,000       81
Steel              1,510,000        83
Aluminum           2,915,000        83
Copper-Base        400,000          80
Magnesium          140,000          94
Zinc/Lead          410,000          84
Other Nonferrous   70,000           74
Investment         200,000          83
Total              17,575,000       81

Imports Continue to Rise 2004

Imports of castings are forecast to increase to 2,60,000 tons in 2004, 18% of casting shipments in the U.S. As shown in Table 7, imports of gray iron castings are expected to rise to 1.4 million tons, 29% of total, casting shipments. Aluminum die casting imports are forecast to increase to 19% of shipments, Imports am forecast to rise 5% per year for the next 7 years to near 3.0 million tons, which would amount to 20% of shipments.

Table 7. Forecast of Casting Imports in 2004

Metal               Shipments     Imports     Imports' % of Shipments

Gray Iron           4,891,000     1,426,000             29
Ductile Iron        2,454,000 *   406,000 *             17
Malleable Iron      82,000        21,000                26
Steel               1,255,000     167,000               13
Aluminum Die Cast   1,364,000     255,000               19
Aluminum PM/Sand    1,045,000     185,000               18
Brass/Bronze        321,000       64,000                20

* Not including pressure pipe.

This article was abstracted from the 2004 AFS Metalcasting Forecast & Trends Report. For more information, contact AFS Special Publications at 800/53 7-4237 or the E-store at www.afsinc.org/estore.

For More Information

Visit www.moderncasting.com for "37th Census of International Casting Production--2002," originally published in the December 2003 MODERN CASTING.

A 50-year foundry industry veteran, Ken Kirgin has held executive posts at founderies, foundry suppliers and consulting organization. He founded Stratecast in the early 1980s to provide domestic and international forecasting and trends analysis and strategic planning. He has handled market consulting duties for AFS since 1993.