Look for slowdown in late 1994.

During the past few years, Stratecasts predicted a boom in 1994, to be followed by a slight downturn in 1995. Ongoing interviews with major casting OEMs confirm our original expectations and indicate that most casting markets could slow down beginning later this year and carry over into 1995.

Export conditions, however, are forecasted to improve in 1995 and could soften the downturn and offset domestic economic conditions. A long-term growth of 1% per year is forecast for the total metalcasting industry during 1995.

Consumption of castings by motor vehicle manufacturers continues in boom proportions. Most foundries serving the motor vehicle sector and other major market segments are extremely busy. Recent surveys, however, indicate that backlogs in some markets are lagging and could lead to a downturn in the fourth quarter of this year. The following recent update of our annual forecast, completed last fall and reported in the January issue of modern casting, takes these changes into consideration and reforecasts market sectors where necessary.

Stratecasts' methodology in forecasting uses macro forecasts based on econometric forecasts from major banks and institutions as well as forecasts from key industrial publications. Since some of these have changed since our last report, we have compared our original macro forecasts with reported actual results. These are shown in Table 1.

The 1994 casting demand based on these macro changes, coupled with new interviews with key personnel of major companies in the market sectors, also has been updated. These are reported in Table 2.

The total forecast shows very little change. However, individual market sectors do indicate significant changes. These are discussed below.

There is a significant gain in gray iron shipments in 1993, compared to our original forecast, coupled with a loss in aluminum shipments. This was caused by a slowdown in the conversion of gray iron to aluminum in automotive blocks and other OEM parts. A higher than expected gain in malleable cast iron shipments reflects the continued high production of malleable in GM's Saginaw, Michigan, foundry.

Table 1. Macro Forecast Criteria--1993-94

The 1994 metal casting demand and supply forecast was based on the following
macro forecast data. The information shown here is a scorecard comparing our
1993 forecast with the actual reported results and a reforecast for 1994, if
warranted.

Gross Domestic Product
  Forecasted 1992-93                 +3.0%
  Reported 1992-93                   +2.9%
  Forecasted 1993-94                 +3.7%
  Forecasted 1994-95                 +2.5%

Housing Starts
  Forecasted 1992-93                +10.0%
  Reported 1992-93                   +8.0%
  Forecasted 1993-94                 +6.0%
  Forecasted 1994-95                 +0.5%

Construction Activity
  Forecasted 1992-93                 +8.0%
  Reported 1992-93                   +5.0%
  Forecasted 1993-94                 +6.0%
  Forecasted 1994-95                 +1.0%

Raw Steel Production (millions)
  Forecasted 1993                  95 tons
  Reported 1993                    90 tons
  Forecasted 1994                 100 tons
  Forecasted 1995                  97 tons

Domestic Motor Vehicle Production (million units)

                      Pass Car/     Med/Hvy
                      LtTruck       Truck

Forecasted 1993        10.8         0.26
Reported 1993          10.9         0.27
Forecasted 1994        11.9         0.30
Reforecasted 1994      12.2         0.32
Forecasted 1995        11.7         0.29
Table 2. Demand for Metal Castings (000 tons)

                 1993      1993      1994        1994         1995
Metal          Forecast   Actual   Forecast   Reforescast   Forecast

Gray Iron        5272      5338      5554        5550         5405
Ductile Iron     3677      3683      4009        4055         3901
Mall Iron         225       266       235         284          263
CG Iron           21        21        22          22           20
C & LA Steel     1014      1015      1051        1046          958
HR Steel          28        28        31          31           30
CR Steel          61        61        71          68           67
Mn Steel          28        28        32          32           28
Other Steel       31        31        33          33           33
Aluminum         1470      1463      1671        1617         1558
Cu Base           299       300       318         312          300
Zn Base           374       374       398         400          384
Magnesium         41        28        47          32           31
Other NF          40        40        44          44           43
Invest Cstg       135       137       155         153          142
TOTAL            12716     12813     13671       13679        13163

Figures for 1993 are 0.7% greater than the original forecast.
Figures for 1994 are forecasted at 0.1% more than original forecast.
Forecast indicates a possible downturn in 1995 in some market sectors.

Other significant changes include:

* An earlier than expected loss of ingot mold tonnage to continuous cast steel is occurring. Continuous casting now represents nearly 90% of the steel production in the U.S.

* The farm machinery sector is experiencing a very strong recovery.

* Casting consumption in machine tools continues to increase.

* As expected, there has been a continued decline in aluminum casting use for aircraft parts.

* The recession in Europe continues.