Higher demand in specific markets, weight classes expected for '04.

Following interviews of casting end users in the U.S., Stratecasts has forecast 2004 demand of metal castings by weight classes, casting processes and market sectors. The analysis shows the lower weight-range classes continue to dominate the demand in most market sectors, although other weight classes and casting processes are expected to show growth in the years ahead for specific metals.

No significant shortages of supply are currently evident in any category, although buyers of large sand-cast carbon and low alloy steel could see domestic shortages in the near future due to the loss of capacity. Specialized semi-permanent mold (SPM) aluminum castings could also be in short domestic supply unless captive operations are expanded.

The recent analysis evaluated demand for differing production quantities [i.e., low production, and medium to high (M-H), meaning more than 50-mold runs] and weight classes in the major casting-consuming markets.

Gray Iron

About 1.60 million tons of M-H production gray iron casting demand is forecast to be in the 0-50 lb range, which represents 41% of the M-H total. The demand/supply ratio is 0.84, indicating a 19% surplus of supply.

The 50-150 lb class of M-H production is forecast to be slightly lower at 1.2 million tons because of the loss of engine block and cylinder head production. The supply surplus is estimated at 30%. The total surplus for all engineered castings is forecast at 1,066,000 tons based on 0.82 demand/supply ratio and 72% utilization of capacity.

Utilization for U.S. foundries using horizontal matchplate molding is forecast at 76%, indicating a large surplus of capacity. The utilization is slightly higher (78%) for vertically-parted molding foundries, resulting in an estimated surplus of 240,000 tons in '04.

Motor Vehicles--Demand for M-H quantity castings in the 0-50 lb range is forecast to rise 5% in '04 (to 792,000 tons) based on the forecast production of 13.2 million light vehicles. About 592,000 tons of gray iron are forecast to be produced in the 50 150 lb range. This is a big reduction from prior years due to the conversion of engine castings to aluminum, and this loss is forecast to continue.

With a demand of 877,000 tons of castings made via vertically-parted molding, a supply surplus of 150,000 tons is anticipated in 2004.

Diesel Engines--The low production of medium-to-heavy trucks has drastically reduced demand for M-H castings in the 50-150 lb and 150-300 lb ranges, to 105,000 tons and 212,000 tons, respectively.

Household Appliances--Use in this sector continues to fall based on the conversion to light metals and plastic. Demand in the 0-50 lb range is forecast to decline to a new low of 46,000 tons.

Refrigeration & AC--Though much of the sand-cast demand in the 0-50 lb range has fallen due to conversions to lost foam and shell molded compressor parts, about 112,000 tons of gray iron are still expected to be consumed in '04. Most will be produced by flaskless molding

Pumps & Compressors--Based on the expected rebound and expansion in '04, an increase in the demand of 300 700 lb and 700-plus lb castings is forecast at 56,000 and 44,000 tons, respectively.

Ductile Iron 

The 0-50 lb range of high-production castings dominates the demand for ductile iron at 1.56 million tons, or 69% of the total M-H production. The demand/ supply ratio of this class is 0.85 on vertically-parted molding and 0.82 on horizontal matchplate machines, indicating an adequate capacity surplus. In both categories, utilization should remain at 81% in the near future, as additional capacity is expected in 2005-06.

Motor Vehicles--The 0-50 lb casting range again dominates the M-H production with 1,095,000 tons to be consumed in passenger cars and light trucks and 171,000 tons in medium-to-heavy trucks. Casting demand made via vertically-parted molding in weights up to 100 lb is estimated at 1.1 million tons. Despite the partial conversion of suspension and carriers to cast aluminum, about 5% capacity for vertically-parted molding must be added in '05 to meet a demand/supply ratio criteria of 0.85, and a 15% surplus. Domestic utilization for U.S. foundries is estimated at 81% for '04 resulting in an estimated surplus of 180,000 tons.

Valves & Fittings--The major tonnage lies in the 50-150 lb range produced by the pipe manufacturers for use with centrifugal-cast pressure pipe in water distribution systems. Threaded pipe fittings continue to be specified in malleable iron, although some have been converted to ductile iron and are included in the 0-50 lb range. Conversions to ductile should continue.

Farm Machinery & Equipment--A gain in farm machinery shipments should increase casting demand. The 0-50 lb market consumes 44,000 tons of the sector's 103,000 tons.

Special Industry Machinery--This market consumes a sizeable part of the 300 700 lb and 5000-plus lb casting classes, made primarily by floor molding. Housings for plastic machinery and castings for printing and papermaking machinery consume a majority of the tonnage.

Construction Machinery & Equipment--Conversion of steel to ductile iron in housings and carriers has increased the demand in the 50-plus lb ranges. Demand should reach 49,000 tons for castings weighing over 700 lb.

Steel

The vast majority of the non-railroad carbon and low-alloy steel castings are consumed in the 1-100 lb and 101-500 lb ranges. Though there is ample supply in these ranges, a shortage could occur in the 5000-10,000 lb range, which is forecast to have a demand/supply ratio of 0.99 in '04. About 136,000 tons are expected to be consumed in the 1000-plus lb categories. Heavy castings of 10,000-plus lb are forecast to reach 41,000 tons in '04, and also could be in short supply in the future because of a loss of capacity.

Railroad--Railroad castings including wheels, bolsters, side frames, couplers and yokes are primarily in the 100-1000 lb casting range, and are forecast to reach 480,000 tons in '04 if the expected 35,000-freight car delivery totals is reached. At present, there is a large surplus of supply capacity.

Construction & Mining--The majority of the carbon and low-alloy steel castings in these sectors are in the 100-1000 lb class. After many years of decline, growth is forecast in the mining market for the next few years.

Valves & Pumps--Annual growth of only 1.5% is forecast in this market because of import pressures and conversion to ductile iron. While the low to medium weight ranges consume more than 80% of these steels, a sizeable market exists for castings over 1000 lb.

Corrosion-Resistant Steel--More than 75% of these castings weigh less than 500 lb. Most of the stainless and high-alloy castings are produced in carbon steel foundries. Adequate supply capacity exists.

Aluminum

Demand for aluminum castings is forecast at 2.5 million tons for '04. Motor vehicle consumption dominates the market at 64%. Demand for high-pressure die castings is forecast at 1.4 million tons, while SPM aluminum is forecast at 497,000 tons. Demand/supply conditions indicate an adequate surplus for both categories, however, capital investment in precision sand processing equipment by OEMs is planned.

Motor Vehicles--The diecasting process dominates the casting shipments at 884,000 tons. Low pressure diecasting and lost foam, primarily used for cylinder beads, are forecast at 210,000 tons and 143,000 tons, respectively. SPM demand is forecast at 301,000 tons, while demand for sand castings, used primarily for intake manifolds, is expected to reach 92,000 tons. The future market for aluminum engine blocks and heads is expected to cause a domestic capacity shortage, although captive supply capacity at OEM facilities is planned to meet casting requirements.

Brass & Bronze

Beyond special applications, such as propellers and large marine and pump parts, 90% of the castings weigh less than 50 lb and are made via matchplate molding. The demand/supply ratio in '04 is forecast at 0.86 for 343,000 tons of demand.

This article, was adapted from one that originally appeared in the Fall 2003 AFS Member Connections newsletter for AFS corporate members.

RELATED ARTICLE: Update on casting imports/exports.

Preliminary information indicates that imports in 2004 should reach 2.6 million tons, and grow to 18% of the total casting shipments. The largest market sectors affected are summarized below.

Diesel Engines--About 50% of the 700,000-ton demand for gray iron engine castings demand is imported from Brazil, Mexico, Germany and, recently, China. U.S. captive (near 200,000 tons of capacity) and jobbing shipments are limited to only 420,000 tons per year. Foreign pricing appears to be in the "dumping range."

Municipal Construction--More than 100,000 tons of manhole covers, frames, grates and similar municipal castings are imported (primarily from India) for consumption in the coastal regions of the U.S. A total of 250,000 construction castings, including municipal as well as hydrant castings, fittings and centrifugal cast gray iron pipe are imported for use in construction sites. Roughly 32% of the casting demand is imported. India allegedly has subsidized foundries for years, and assists in the export of castings to U.S. municipalities, while anti-dumping duties on Indian foundries and brokers have thwarted some of this activity, imports continue to be high,

Valves & Fittings--Imported valves/fittings are estimated at 280,000 tons per year, or 33% of the demand. Much of these parts originate in Asia and are imported at extremely low prices. While tariffs are in effect on Brazilian and Chinese manufacturers, castings still enter as finished and semi-finished parts and are difficult to quantify. Dumping-level pricing continues.

Motor Vehicles--More than 900,000 tons of castings (19% of the demand) are imported from Asia and Mexico as semi-finished and machined castings. Despite the fact that the SARS scare delayed shipments, and costs of insurance, shipping and delivery/ storage have increased, imports are expected to rise. Reported prices indicated that U.S. firms are importing cast parts at prices below cost of production.

A weakened dollar forecast will assist foundries in increasing casting exports (to 1.6 million tons), which are expected to reach 11% of demand. The weaker dollar also should increase exports of U.S. motor vehicles and mining, construction and farm equipment. These strong casting-consuming markets should profit through increased utilization next year.