Taking stock of casting imports: casting imports are to reach 3.2 million tons in 2006, with 48% to be produced in Asian countries.

This article is Part Two in a two-part series focusing on global metalcasting trends. Part One, "Global Shipments of Metal Castings to Reach 90 Million Tons in 2008," was published in the May issue of MODERN CASTING.

An 8% increase in casting imports to the U.S. is forecast in 2006, reaching 3.2 million short tons, or 20.4% of casting demand. Imports of gray iron castings are expected to rise to more than 1,582,000 tons, or 27.7% of demand, while diecast aluminum imports are estimated at 22.6%. Market sectors such as valves and fittings, diesel engines, municipal and street construction, construction machinery and equipment and motor vehicles are to be most affected by the rise.

A continued weak dollar is expected to spur the increase of casting exports to 1.7 million tons in 2006, 10.8% of demand. Exports of farm and construction machinery and equipment, which are large consumers of castings, have increased the demand for metal castings in these market sectors.

Exports and Imports

Table 1 summarizes the forecast of demand, shipments, imports and exports of the major metal castings in the U.S. in 2006. Ductile iron has the highest export/import (E/I) ratio at 0.85, while gray iron is low at 0.38. Because of the low E/I ratios and high import/demand ratios, the shipments/demand ratio of the total metalcasting industry has dropped to a new low of 0.90.

Approximately 3.2 million tons of metal casting imports from foreign competitors are forecast for 2006. These imports cover many market sectors. The sectors that have the highest percentage of import to demand ratios are internal combustion engines, including diesel engines; motor vehicles, including passenger cars, light trucks and medium to heavy trucks; municipal castings, including street castings such as frames, grates and covers; and valves and fittings. Table 2 summarizes the forecast of imports to the U.S. in 2006.

Municipal--It is forecast that 122,000 tons of manhole covers, frames, grates and other municipal castings are to be imported, primarily from India, to coastal regions of this country. Most U.S. coastal metalcasting facilities have shut down, and some now are buying and selling Indian castings. Another 173,000 tons of cast pipe, hydrant castings, fittings and other construction cast parts are forecast as imports in 2006. The E/I ratio is one of the lowest in the industry at 0.04. In addition to gray iron, approximately 5,000 tons of ductile iron municipal castings are imported from abroad.

Valves and Fittings--It is forecast that 128,000 tons of gray iron, 94,000 tons of ductile iron, 24,000 tons of carbon and low alloy steel and 31,000 tons of copper base alloy valves and fittings are to be imported in 2006. In addition, 17,000 tons of malleable iron threaded pipe fittings are expected to be imported from Thailand, Taiwan and other Asian and Brazilian companies. Most of these cast parts are imported as finished parts and not often reported as castings in government statistics. It is estimated that imports amount to 34% of the total demand for cast valves and fittings in the U.S. The E/I ratio for gray iron is low at 0.50.

Internal Combustion Engines--Imports of blocks and heads from Brazilian and Mexican metalcasting facilities at prices which appear to be in the "dumping" range have forced the closing of major U.S. firms and increased the dependency on foreign supply. It is forecast that 359,000 tons of gray iron engine castings, 50% of the demand, will be imported in 2006. Cost analyses of blocks supplied to major U.S. engine producers have indicated that the castings are supplied at prices below those in their own country and thus in violation of current dumping regulations. No actions, however, have been taken against these foreign exporters. A low E/I ratio of 0.20 has caused the shipments/demand ratio to drop to 0.60

Farm Machinery & Equipment--It is forecast that 75,000 tons of gray iron and 25,000 tons of ductile iron, exclusive of engine castings, are to be imported in 2006 from primarily China and other Asian countries. The E/I ratio for iron farm equipment castings is 0.70, dropping the shipment/demand ratio to 0.93.

Construction, Mining & Oil Field Machinery--It is forecast that 153,000 tons of ferrous castings are to be imported in 2006 for consumption in machinery and equipment produced in the U.S. That is 15% of the demand for iron and steel castings. The E/I ratio for ferrous castings is 0.70 with a shipment to demand ratio of 0.94.

Pumps & Compressors--Approximately 44,000 tons of gray iron and 11,000 tons of ductile iron castings are purchased offshore as raw castings or partially machined parts. The E/I ratio for all ferrous castings is 0.90. The low ratio is forecast to drop the shipment to demand ratio to 0.98.

Refrigeration & Air Conditioning--U.S. manufacturers are expected to buy 34,000 tons of gray iron compressor and other castings in 2006 from foreign casting suppliers. Diecast aluminum imports are forecast to grow to 11,000 tons.

Light Vehicles--Led by rotors from Canada and Mexico, 355,000 tons of gray iron cast parts are expected to be imported in 2006. Ductile iron imports, led by exhaust manifolds from Canada and miscellaneous castings from Korea, China, Japan and other Asian countries, are forecast to reach 266,000 tons. Imports of aluminum die castings are predicted to reach 248,000 tons in 2006, while approximately 204,000 tons of aluminum permanent mold and sand castings, including automotive engine blocks and cylinder heads, are expected to be imported from Mexico, Brazil, Canada, Japan, Germany and other European countries.

Railroad--It is forecast that 138,000 tons of carbon and low alloy steel castings are to be purchased from China and other foreign suppliers.

Import to demand ratios have been established for all market segments for all metals. Ratios for some major market sectors are shown in Fig. 1.

[FIGURE 1 OMITTED]

The Key Players

Based on Stratecasts' analysis of individual market sectors, Fig. 2 depicts the estimated breakdown of casting imports in the U.S. by exporting countries. An effort has been made to include imported finished and partially machined cast parts.

CHINA

China's currency exchange rate is pegged to the dollar and valued at 8.01 yuan dollar. Exports of raw castings and partially or finished machined castings to the U.S. are estimated at 762,000 tons in 2006. Total casting exports, including machined parts, are estimated to be near 3.2 million tons, 13% of total casting shipments.

Though labor rates in metalcasting facilities are reported to average below $1/hr., cost studies of some castings exported to the U.S. indicate that prices delivered are below costs and thus could belong in the "dumping" category. Antidumping tariffs have been placed on valve shipments in recent years.

The prime import markets in the U.S., supplied from China, are diecast aluminum in the motor vehicle and internal combustion engine markets; investment castings for golf club and valve applications; steel railroad castings; iron castings in the farm and construction equipment markets; and valve and fitting castings of ferrous and nonferrous metals.

INDIA

India's currency exchange rates are expected to average near 45 rupees per dollar in 2006. Exports to the U.S. are forecast at 278,000 tons in 2006.

The prime markets for imports in the U.S. are iron municipal castings, gray iron pump castings and power transmission parts. The municipal casting industry in the U.S. has constantly fought the "dumping" practices of Indian companies and has been rewarded with imposition of anti-dumping duties. These tariffs have been successful in keeping imports down; however, castings continue to be delivered to municipalities at very low prices.

KOREA

Korea's currency exchange rate is now 960 won per dollar, and casting imports to the U.S. are estimated to be close to 190,000 tons in 2006. Labor rates are forecast at $11/hr., including fringe, at the forecast currency exchange rate. The relatively weak rate has kept Korea competitive and active in exporting castings to the U.S. and Europe. The prime markets for imports are the motor vehicle market and farm and construction iron cast parts.

JAPAN

The yen has weakened to 118 against the dollar and is expected to weaken further to 120.

Casting imports to the U.S. are estimated between 175,000 tons and 195,000 tons. Labor rates in Japanese metalcasting facilities are forecast at $23.30/hr. at present exchange rates. The prime market sectors supplied by imports from Japan are vehicle, diecast aluminum internal combustion engine castings, truck parts and valve parts.

OTHER ASIAN NATIONS 

Taiwan and Thailand have been active in exporting iron valves and fittings and other castings to the U.S. Anti-dumping tariffs have been levied on malleable fittings from Thailand.

MEXICO

The currency exchange rate for Mexico is at 11.1 pesos to the dollar. Casting imports to the U.S. are estimated at 315,000 tons for 2006.

Labor rates in major metalcasting facilities are estimated at $2.50/hr.

The prime U.S. markets for Mexican imports in the U.S. are gray iron diesel engine blocks and heads. It is reported that gray iron diesel engine castings are being delivered to U.S. manufacturers at extremely low prices. This practice ultimately led to the closing of U.S. casting facilities. Other prime markets for imports are lost foam iron refrigeration castings and automotive brake parts.

BRAZIL

Brazil's real has strengthened to 2.1 per dollar in 2006, and casting imports to the U.S. are forecast at 265,000 tons. Labor rates in Brazilian metalcasting facilities now average about $4.50/hr.

The prime market for imports is diesel engine block and head castings. Brazilian metalcasting facilities are competing with Mexican firms in the shipment of diesel engine blocks and heads to U.S. engine manufacturers. Delivered prices of many castings possibly can be classified in the "dumping" category. The fitting market has been plagued by the dumping of malleable iron fittings. Anti-dumping tariffs have lowered imports.

EUROPE

The euro is now strong at $1.21 per euro and is expected to remain strong while casting imports from Europe to the U.S. are estimated at 320,000 tons for 2006. Estimated average metalcasting labor rates for European countries in 2006 are shown in Table 4.

The prime markets supplied from Europe are diesel engine castings from Germany, aluminum parts from Italy and France, ductile iron municipal and machine tool cast parts.

CANADA

The currency exchange rate is at $1.15 Canadian per U.S. dollar. Imports of cast products to the U.S. in 2006 are estimated at 368,000 tons, and the average metalcasting labor rate is $16.20/hr. The prime export markets for Canada in the U.S. are aluminum blocks and heads, gray iron brake parts and ductile iron exhaust manifolds.

Exports

Based on the forecasted currency exchange rates in other regions of the world, it is expected that exports of castings and finished cast parts from the U.S., as shown in Table 1, will reach 1.71 million tons in 2006. U.S. companies are expected to be competitive with European companies in markets throughout the world.

For More Information

"Global Shipments of Metal Castings to Reach 90 Million Tons in 2008," K. Kirgin, MODERN CASTING, May 2006, p. 25-30.

A 50-year metalcasting industry veteran, Kan Kirgin founded Stratecasts Inc. in the early 1980s to provide domestic and international forecasting and trends analysis and strategic planning.

Table 1. Forecast of Metal Casting Demand, Shipment,
Imports and Exports in the U.S. for 2006 (000 tons)

Metal                          Demand   Shipments   Imports   Exports

Gray iron                       5,720       4,742     1,582       604
Ductile iron                    4,743       4,658       570       485
Carbon/LA steel                 1,182       1,060       244       122
Aluminum die castings           1,491       1,340       337       186
Aluminum permanent mold/sand    1,120       1,011       255       146
Copper-base                       350         326        66        42
Other                           1,205       1,158       169       122
Total                          15,811      14,295     3,223     1,705

Table 2. Forecast of Casting Imports into the
U.S. by Major Market Sectors for 2006 (000 tons)

                                   Gray     Ductile    C&LA
Market sector                      iron      iron     Steel

Municipal total                     295
(Frames, covers, grates, etc.)     (122)
Valves & fittings                   128        94       24
Internal combustion engines         359        19        1
Farm equipment                       75        25
Construction/mining/oil field        50        35       68
Machine tool, dies, power tool       18         5        2
Pumps/compressors                    44        11        2
Special industry machine             26         7        2
Refrigeration/AC                     34         5
Light vehicle                       355       266
Medium/heavy truck                   62        65        8
Railroad                                               138
Other                               136        38        1
Total                             1,582       570      244

                                    Al      Al PM/
Market sector                     Diecast    Sand     Bronze   Other

Municipal total
(Frames, covers, grates, etc.)
Valves & fittings                                       31      23
Internal combustion engines          16         4
Farm equipment
Construction/mining/oil field
Machine tool, dies, power tool        7         2
Pumps/compressors                                                2
Special industry machine                                         2
Refrigeration/AC                     11         2
Light vehicle                       248       204               11
Medium/heavy truck
Railroad
Other                                55        43       35     131
Total                               337       255       66     169

Table 3. Export/Import and Shipment/Demand
Ratios for Light Vehicle Casting Shipments

Metal                            Export/Import   Shipment/Demand

Gray iron                             0.45            0.84
Ductile iron                          0.5             0.88
Aluminum diecast                      0.5             0.86
Aluminum permanent mold & sand        0.5             0.86

Table 4. Average Metalcasting Facility
Labor Rates in Europe

Country                              $/Hr.

Germany                              25.40
Austria                              21.20
France                               19.50
Italy                                19.30
United Kingdom                       17.50
Spain                                16.10
Portugal                              9.60

Fig. 2. Casting imports are expected to reach 3.2 million tons in 2006,
led by exports from China and other Asian Countries.

Estimated Imports of Metal Castings into the U.S. by
Exporting Countries in 2006 (in tons *)

Indian               278,000
China                762,000
Other Asiatic **     520,000
Mexico               315,000
Brazil               265,000
Europe               320,000
Canada               368,000
Other                395,000
Total              3,223,000

(*) Includes raw, partially machined and completed cast parts.

(**) Includes Japan, Korea, Thailand and Taiwan

Note: Table made from pie chart.