Global conditions slowing demand.

Interviews with U.S. casting end-users have reinforced earlier forecasts for a downturn in casting demand beginning this year and carrying into 2000. Though the U.S. economy continues to be healthy, deteriorating conditions abroad are affecting casting users, resulting in cutbacks in orders in many market segments.

Though Europe's recovery continues, it is occurring slower than expected. This, coupled with the crises in Brazil, Mexico, Japan, Korea and other Asiatic and Latin American countries, has reduced exports by major casting users.

Stratecasts continues to forecast a 3.7% decline in shipments of all castings this year followed by a another drop of 3% in '00 - a total loss of 950,000 tons of casting shipments from the '98 peak.

Gray Iron

Based on decreases in most market sectors, U.S. gray iron shipments are expected to decrease 4.6% this year to 5.95 million tons. Capacity utilization is expected to drop to 82% with a surplus of supply in most product sectors.

Motor Vehicles - based on the production of 11.3 million light vehicles and 310,000 medium-to-heavy trucks in '99, 2 million tons of gray iron castings are expected to be consumed in these markets - a loss of 100,000 tons (5%) from '98.

The growth in light trucks (which now makes up 52% of all light vehicles produced in the U.S.) has held the conversion to aluminum in check, however, more stringent corporate average fuel economy (CAFE) regulations are expected to force conversion in the next few years. Gray iron's use in medium-to-heavy trucks and trailers is forecast at 200,000 tons this year - a loss of 13% from '98 as truck production declines.

Municipal Castings - Demand for municipal castings is expected to fall this year and next with the lower housing starts. based on lower demand and increased imports from India and other countries, shipments are forecast to decline to 480,000 tons in '00, a loss of 4%.

Cast Metal Make-Up (lbs) Per Light Vehicle

Metal                      1994             2000
                       (750 lb)         (777 lb)

Gray Iron                 48.7%            41.8%
Ductile Iron              23.5%            25.1%
Malleable Iron             3.6%             2.3%
Aluminum                  19.2%            25.8%
Zinc                       3.6%             2.4%
Magnesium                    1%             2.6%

Machine Tool - Gray iron use in machine tool and metalworking machinery took a 6% fall in '98 and is expected to continue to drop another 5% this year to 122,000 tons. Poor export and import conditions could force a continued drop into '00.

Pumps and Compressors - Shipments are expected to decrease 2% per year through '00 as demand in industrial use drops. Noncaptive large casting producers will see a gain in their market as another 10,000 tons of captive compressor castings production is closed.

Special Industry Machinery - Casting shipments to producers of printing, food product, textile and other special machinery are forecast to decline 2-4% in '99 and '00, affecting the capacity utilization of small-to-medium sized jobbing foundries.

Diesel Engine - Use in diesel engines grew 5% in '98. The forecasted drop in the production of trucks and farm and construction equipment this year, along with a rise of imports from Mexico, Brazil and European countries, is expected to cause a 9-10% decline in gray iron engine casting shipments.

Refrigeration and Air Conditioning - Lower auto production and the drop-off in housing starts could have a dampening effect on shipments of compressors and other casting parts for refrigeration and air conditioning in '99. Exports to Asiatic countries and South America have declined and are not expected to recover until '01.

Ductile Iron 

After peaking at 4.2 million tons last year, U.S. ductile iron production is forecast to decline 3% in '99 based on the reduction of casting demand for pipe and farm equipment.

Pipe - The slowdown in housing construction and a loss of exports is expected to lower pipe production in '99. The conversion to plastic pipe continues in some regions in the U.S., however, ductile iron pipe production is expected to continue at annual levels of near 1.8 million tons.

Motor Vehicles - The growth of light trucks, sports utility vehicles and vans to 50% of all light vehicles produced has increased demand for ductile iron castings. The average weight of ductile iron castings per light vehicle is expected to reach 190 lb by '00. Shipments for use in light vehicles are expected to decline only 2% in '99 and '00. Consumption in medium-to-heavy trucks peaked at 218,000 tons in '98 and is forecast to decrease 10% this year as truck production declines.

Farm Machinery - Farm machinery production increased 6% in '98, however, the decline that began in the last quarter is expected to continue at a 10% rate this year, with a further loss of 5% in '00 as domestic demand and exports drop. Shipments are expected to decline in '99 to 120,000 tons - the same level as '96.

Construction Machinery - Casting shipments rose to 170,000 tons in '98 based on a peak year for construction activity, despite the loss of exports by major manufacturers. Further decreases in exports and housing starts are forecast to reduce tonnage by 2% this year, followed by another 5% loss in '00.

Steel Castings 

U.S. steel casting shipments hit a 17-year high in '98 as a result of high demand for railroad castings. A continued weakening in most market sectors is expected to drop steel shipments 10% this year and 12% in '00.

Railroad - Freight car deliveries in '98 exceeded earlier forecasts and reached 76,000 cars, the best year since '79. Discussions with industry representatives indicate that deliveries should fall to 65,000 units this year and then stabilize in the 50,000 range over the next 5 years. Steel casting shipments in this market sector increased 270,000 tons in '98 to 859,000 tons. A 150,000-ton drop is forecast for this year.

Mining - Shipments of carbon and low-alloy, manganese and abrasion-resistant steel castings reached 116,000 tons in '97 and declined slightly in '98. A slight decline is expected this year and next before rising to peak years in '02 and '03.

Construction - Steel casting consumption in this market sector rose to 183,000 tons last year. based on the reduced construction forecast, a slight drop of 2% is expected in '99.

Aluminum Castings

Despite the forecast for reduced car and truck production this year, aluminum casting consumption is expected to rise 1% to 1.8 million tons in the U.S. as the conversion of iron engine blocks and cylinder heads to aluminum accelerates.

Aluminum Die Casting - Aluminum die casting shipments reached 1 million tons last year and are expected to increase another 2-3% in '99 based on increased auto applications.

Motor Vehicles - Aluminum casting consumption in automobiles and tracks will increase rapidly in the next few years and are expected to reach 200 lb of castings/vehicle by '00. The major growth applications are engine blocks (to be used in 35% of the vehicles in '00) and cylinder heads (to be used in 90% of light vehicles representing more than 150,000 tons). Aluminum's use in brake and suspension applications is expected to accelerate in '99 and '00 to 8-10% consumption levels in light vehicles.

Copper-Alloy Castings

Based on the expected reduction in industrial and plumbing and sanitary fitting demand, a 3-4% drop in copper-alloy casting shipments is forecast for '99 and '00. A low of 280,000 tons is forecast for '01 before rebounding to 320,000 tons by '04.

Magnesium Castings

Magnesium casting production is forecast to grow to more than 10 lb/light vehicle in '99 and continue to expand use to 25 lb by '04. Total magnesium casting shipments in the U.S. are forecast to grow to 50,000 tons by '00.

Investment Castings 

Investment casting shipments are forecast to continue to grow at a 10-year annual rate of 2.6% to 223,000 tons in '08. The major commercial markets have historically been valve and pump parts, while aircraft engine blades and vanes dominate the sales of special aircraft castings and make up about 20% of the dollar value of the industry. Investment cast superalloy shipments for blades and vanes are expected to grow to 15,000 tons in '08, a sales value of $500 million.