U.S. casting sales to maintain course with 3.7% rise: growth in aluminum and ductile iron is forecast for the next two years, while gray iron and steel casting shipments are expected to decline.
Ductile iron casting shipments, however, are forecast to continue gaining in the next two years and grow 0.5% in the long term. Aluminum casting shipments are expected to rise 2% in 2007 and grow by 4.5% through 2008.
Imports are forecast to keep domestic casting shipments at a minimum in many market sectors, as they are expected to reach 3.5 million tons in 2007. Due in part to higher oil prices, the market for small passenger cars is expected to increase, as will car imports, which will reduce the market share of domestic light vehicle manufacturers. More iron engine blocks and differential and suspension castings continue to be converted to aluminum in light tracks due to proposed fuel economy standards.
Interviews of casting end users and analyses of econometric forecasts have supported the optimism for gains in casting demand for the next two years. Sales, which are estimated at $35 billion for 2006, are forecast to increase to $37.75 billion by 2008 and rise to $44 billion in 2016 (Fig. 1). Shipments of metal castings are forecast to decrease 0.3% to 14,572,000 in 2007, but grow by 0.3% to 14,611,000 tons in 2008.
[FIGURE 1 OMITTED]
The higher growth rate for metal casting sales reflects the change of the product mix to higher-priced light metal castings in vehicles.
Following is a look at the forecast of casting demand by the major end-use industries for metal castings.
The total production of light vehicles in the U.S., which includes both passenger cars and light trucks, is expected to increase 3% in 2007, with Passenger car production rising 10%. Currently, passenger car production accounts for 40% of this market sector, but that could rise to 52% by 2016.
Forecast--Shipments of gray iron castings will decline annually to 926,000 tons by 2008 and reduce at an annual long term rate of 1% to reach a low of 806,000 tons in 2012. The average weight of gray iron per light vehicle is forecast to drop to 140 lbs.
Ductile iron shipments are expected to decrease by 0.6% to 951,000 tons in 2007 with a long-term loss of 1% per year. Steel castings will likely decline to 55,000 tons in 2007 and at a rate of 7% per year in the long term.
Aluminum casting weight per light vehicle has increased to 260 lbs. Casting shipments are forecast to increase 2.3% to 1.4 million tons in 2007 and to 1.6 million tons by 2016.
Internal Combustion Engines
The diesel engine market consumes 90% of the gray and ductile iron castings shipped in this classification. The small gasoline segment consumes 90% of the aluminum casting shipments.
Forecast--Shipments of gray iron castings are forecast to drop again from 440,000 to 408,000 tons and continue to slide at an annual rate of 1.6% as imports increase. Ductile iron casting shipments are forecast to decrease from 112,000 tons in 2006 to 104,000 tons in 2007. Still, conversions of gray iron, steel and malleable iron to ductile iron have spurred some growth in the short and long term.
Shipments of steel castings in the turbine and turbine generator industries are forecast to grow at an annual rate of 0.6% to 19,000 tons in 2016, peaking in 2007 and 2008.
Aluminum castings in internal combustion engines are forecast to increase 0.7% annually to 140,000 tons in 2016. Aluminum die castings are to reach 194,000 tons by 2008.
Agricultural Implement Manufacturing
Following a 4% drop in 2006, farm machinery sales are expected to grow" 2% in 2007 and make long-term gains of 1.5% annually.
Forecast--Gray iron casting shipments, exclusive of engine castings, are forecast to decrease from 310,000 tons in 2006 to 250,000 tons in 2016, with a short-term decline to 293,000 in 2008. Ductile iron castings are expected to continue to replace gray iron, malleable iron and steel, achieving a short-term growth of 7.7% through 2008 and a long-term annual growth of 1.4%.
Construction Machinery & Equipment
Construction machinery equipment shipments are forecast to grow 2.8% per year through 2016, with 2.3% growth through 2008.
Forecast--Gray iron casting shipments likely will reach 262,000 tons in 2007 and grow at a low rate in the long term clue to conversions to ductile iron. Ductile iron shipments are expected to increase 1.8%) in 2007 to 225,000 tons in 2008. Steel casting consumption is forecast to decline annually 0.6% due to replacement with ferritic ductile iron.
Mining Machinery & Equipment
Shipments of mining machinery are expected to increase 3% in 2007 based on increases in mine production and growth in exports of mining machinery.
Forecast--Steel casting shipments rose slightly in 2006; however, shipments will continue to be low in 2007 at 114,000 tons due to imports and loss of applications to other materials and fabrications.
Oil Field Equipment
Continuing high oil prices have kept up demand for oil field equipment. A 3% increase is expected in 2007, with more growth in the following years.
Forecast--Shipments of ductile iron are forecast to increase 3.5% in 2007 and at an average annual rate of 2% in the long term.
Steel casting shipments are expected to see a short-term 2% gain, but decline 2% annually through 2016.
Valves & Fittings
The value of shipments of industrial valves are estimated to have increased 3.5% in 2005 and decreased 2% in 2006. A 3% growth is forecast in 2007.
Forecast--Gray iron valve castings are forecast to decrease from 282,000 tons in 2006 to 266,000 tons in 2016. A short-term rise of 5.6% by 2008 is expected for ductile iron shipments followed by a long-term annual increase of 0.2%. Malleable iron casting shipments are forecast to decrease from 36,000 tons in 2006 to 25,000 tons in 2016.
Steel castings should see a sharp 18% decline over the next 10 years as imports and conversions to ductile iron increase.
A 1.9% increase for the next two years is predicted for copper-base castings, despite imports of more than 30,000 tons.
Forecast--Ductile iron shipments likely will increase from 2.26 million tons in 2006 to 2.36 million tons in 2016. Substitution of plastic pipe continues to hurt growth in iron shipments. Despite this loss to plastic pipe, all four major U.S. producers are expected to have growth years based on a rise in construction activity.
Metalworking Machinery & Equipment
After five years of steady decline, the metalworking machinery industry slightly rebounded in 2005 with a 5% gain. Another 5% gain is expected in 2007 with a long-term forecast of 2% per year.
Forecast--The consumption of gray, ductile iron and steel casting shipments has dropped and is forecast to continue at low levels.
Power Hand Tools
Forecast--The power tool market continues to be a growth market. Aluminum die castings are predicted to grow 3.2% in 2007, while sand and permanent mold aluminum castings rise to 14,000 tons per year. Magnesium casting usage is forecast to rise to 13,000 tons in 2007.
Special Industry Machinery
The average annual weighted growth of machinery used in the packaging, food products, paper, printing and textiles industries is forecast to be 2.3% per year through 2016.
Forecast--A short-term growth of 4.5% to 230,000 tons by 2008 is forecast for gray iron casting shipments. Ductile iron casting shipments are expected to grow 4.5% to 117,000 tons from 2006 to 2008.
A short-term growth of 5.6% to 19,000 tons in 2008 is forecast for stainless steel castings. Heat resistant steel castings are expected to grow 12.5% to 9,000 tons by 2008.
Pumps & Compressors
An increase in highway construction, bridge repair and public works increased demand for pumps and compressors in 2006. Oil field equipment growth has spurred recent casting growth.
Forecast--Gray iron casting shipments are expected to grow 4.2% through 2008 to 255,000 tons. Ductile iron castings are to expand at an average annual rate of 1.5% per year with an 8.2% growth from 2006 to 2008.
Carbon and low alloy steel castings are forecast to increase 5.4% through 2008 while corrosion resistant pumps rise 5.5%.
Gears, Speed Changers & Power Transmission Equipment
Forecast--A 1.7% increase in gray iron shipments is forecast for 2007 with a long-term growth rate of 0.4% per year due to losses to imports and some conversions to plastics and ductile iron. Ductile iron shipments are forecast to rise to 30,000 tons in 2007 and 32,000 tons in the next two years.
Refrigeration, Air Conditioning & Heating Equipment
The U.S. is a major exporter of this equipment, and the industry is expected to show a constant-dollar increase of 3% in 2007 based on a resurgence in housing starts.
Forecast--Gray iron shipments are expected to increase 5% in 2007 with a long-term decrease of 0.2% per year. Ductile iron shipments are predicted to increase 8% to 43,000 tons from 2006 to 2008.
Aluminum die castings, which approximate 80% of total aluminum usage, are forecast to rise to 46,000 tons in 2007.
The constant-dollar value of shipments by the motor and generator industry is expected to expand 2% per year in the long term.
Forecast--The use of gray iron likely will continue to decline, with a forecast drop to 38,000 tons by 2016. Aluminum die castings are forecast to increase to 38,000 tons by 2008, and zinc and lead die castings are expected to increase to 36,000 tons in 2007 but drop to 31,000 tons in later years based on conversions to plastics.
The forecast growth in housing starts should spur growth in appliance production.
Forecast--Gray iron casting shipments likely will decline 5.8% per year based on loss to plastics and aluminum. Aluminum should increase to 76,000 tons in 2007 and continue growth to 78,000 tons in 2008.
Freight car deliveries have increased steadily since 2002 to reach 75,000 in 2006. That total is forecast to drop to 62,000 in 2007 and continue near that amount in 2008.
Forecast--Steel railroad castings are forecast to rise to 758,000 tons in 2006 but drop to 578,000 tons by 2008. Imports are estimated at 22% of demand in 2007.
A long-term growth of 3% per year is forecast for engineering and scientific instruments, measuring and controlling instruments, optical and analytical instruments and photographic equipment.
Forecast--Aluminum castings are expected to increase from 125,000 tons in 2006 to 144,000 tons in 2016, a 1.4% annual growth rate.
This article was adapted from the 2007 AFS Metalcasting Forecast and Trends Report. For more information, contact AFS Special Publications at 800/537-4237 or www.afsinc.org/estore.
For More Information
"Casting Sales Forecast to Grow 14% by "08," K. Kirgin, MODERN CASTING, January 2006, p. 20.
Ferrous Casting Shipments
Ken Kirgin, Stratecasts Inc. Ft. Myers, Florida
Ferrous Casting Shipments
Shipments of ferrous castings are forecast to decrease 1.2% to 11.1 million tons in 2007 and lose an additional 47,000 through 2008. Sales are forecast to increase to more than $16.6 billion in 2007 and $18.7 billion by 2016.
Gray iron castings are forecast to:
* gain only 88,000 tons in shipments between 2003 and 2006;
* decline 1% to 4.73 million tons of shipments in 2007 with a long-term decline of 0.8%;
* rise to $5.3 billion is sales in 2007.
Ductile iron casting are forecast to:
* rise 0.8% to 4,808,000 tons in shipments in 2007;
* increase to 4.83 million tons in shipments in 2008;
* grow 0.5% in shipments annually through 2016;
* rise to $6.7 billion in sales.
Steel castings are forecast to:
* decrease 8.5% in shipments in 2007;
* decline at an annual rate of 2% in shipments in the next 10 years.
Nonferrous Metal Casting Shipments
Shipments of nonferrous castings are forecast to rise at an annual rate of 1.2% through 2016 to 3,593,000 tons. Casting sales are forecast to grow from $14.6 billion in 2006 to $20.2 billion in 2016.
Aluminum castings in the U.S. are forecast to:
* grow 2.2% to 2,388,000 tons in shipments in 2007;
* rise 4.5% in shipments through 2008;
* grow to 2,714,00 tons in shipments by 2016;
* rise to $11.2 billion in sales in 2007 and increase capacity utilization to 84%.
Castings made with brass, bronze and other copper-base alloys are forecast to:
* grow 2% in shipments in 2007;
* gain 16,000 tons by 2008--a 4.9% increase;
* decrease at an average annual rate of 0.6% in shipments through 2016.
A 50-year metalcasting industry veteran, Ken Kirgin founded Stratecasts Inc. in the early 1980s to provide domestic and international forecasting and trends analysis and strategic planning.
Many technological and economic factors have caused a significant shift in the metalcasting industry since 1955, when 6,150 metalcasting facilities operated in the U.S. It now is estimated that the industry will decline to 2,190 facilties in 2007, with 80% of those facilities employing fewer than 100 associates.
Some new and expanded facilities have cropped up in the last few years, but a loss of casting supply of 1 million tons still is expected to occur in 2007 vs. 2001. Table A indicates the forecast capacity and utilization rates for 2007. A total of 2.2 million tons of surplus supply is forecast.
Table A. Capacity and Utilization Forecast for 2007 Metal Capacity (Tons) Utilization (%) Iron 11,200,000 87 Steel 1,510,000 90 Aluminum 2,840,000 84 Copper-Base 380,000 88 Magnesium 180,000 88 Zinc/Lead 390,000 87 Other Nonferrous 70,000 86 Investment 230,000 86 Table 1. Short- & Long-Term Market Summary for Gray Iron Castings Shipments NAICS Industry Short-Term Long-Term Growth '06/'08 AGR * 234110 Municipal +6.9% +1.3% 234910 Soil Pipe -7.9% -4.1% 331511 Ingot Molds 0% -3.5% 332998 Sanitary/Radiator -4.5% -4% 33291 Valves/Fittings +4.3% -0.4% 333618 Internal -9.1% -1.6% Combustion Engines 33311 Farm Equipment -3.9% -2% 333120 Construction +1.9% +0.2% Equipment 333512 Machine Tool -3.2% +0.2% 33329 Special Industry +4.5% +0.2% Machinery 33391 Pumps/Compressors +4.2% +0.6% 3334 Refrigeration/AC -5% -0.2% 333512 Electrical -3.6% -3.8% 3352 Household 0% -5.8% Appliances 336111,2 Light Vehicles -5% -1% 33612 Medium to -11.4% -0.1% Heavy Trucks TOTAL -1.7% -0.8% NAICS Forecast Factors 234110 Housing starts down 5% in 2006, 2.9%/yr. growth forecast; Imports 35% of demand; 40,000 tons converted to ductile iron in 2007 234910 Replacement by plastics; Imports 20% of demand 331511 Continuous cast steel at 98%; Mini-mills-no-blast furnaces 332998 Replacement by plastic 33291 Growth in housing starts from 2006 low; Loss to plastic & ductile iron; Imports at 37% of demand; Gain vs. malleable iron 333618 Diesel engine casting imports >50% of domestic demand; 360,000 tons/yr. imported 33311 Tractor sales decline in 2006; Conversion to ductile iron; Imports up 333120 Growth in building activity; Exports of machinery rise; Loss to ductile iron 333512 58% loss in demand; Industry moved offshore 33329 Conversion to ductile iron; Loss to foreign manufacturers 33391 Conversion to ductile iron; Oil equipment up 3334 Loss to imports 333512 Loss to aluminum, imports 3352 Loss to plastics, aluminum 336111,2 Loss to aluminum, plastics and imports 33612 Growth in truck, trailer; Peak year in 2006 TOTAL Loss of 80,000 tons by 2008; Loss of 369,000 tons in 10 yrs. * Average Annual Growth Rate 2006-16 Table 2. Short- & Long-Term Market Summary for Ductile Iron Casting Shipments NAICS Industry Short-Term Long-Term Growth '06/'08 AGR * 33291 Valves/Fittings +5.6% +0.3% 332996 Pressure Pipe +2.7% +0.6% 33361 Internal Combustion +8.9% +0.2% Engines 33311 Farm Equipment +7.7% +1.4% 333120 Construction +2.3% +1.9% Equipment 33329 Special Industry +4.5% +1.6% Machinery 33391 Pumps/Compressors +8.2% +1.5% 333612 Gears/Power +10.3% +1.6% Transmission 333611,2 Light Vehicles -2.2% -1% 336212 Medium to -11.4% +0.2% Heavy Truck TOTAL +1.2% +0.5% NAICS Forecast Factors 33291 Industry growth; Replacement of malleable, gray iron; Imports up to 35% (100,000 tons) 332996 Building activity to rise; Exports up; Loss to plastics 33361 Imports increase; Trucks drop 33311 Off-year in 2006; Replace gray iron 333120 Replacement of gray iron, steel, malleable; New municipal parts 33329 Replacement of gray iron; Peak in 2008 33391 Replacement of steel, gray iron 333612 Growth in ADI; Imports up 333611,2 Loss to aluminum in suspension & differential parts; ADI growth; Replacing malleable; Some crankshaft loss to forgings; Imports rise 336212 Truck & trailer production peak in 2006; Replacement of steel & malleable TOTAL Gain 59,000 tons by 2008 * Average Annual Growth Rate 2006-16 Table 3. Short- & Long-Term Market Summary for Steel Castings Shipments NAICS Industry Short-Term Long-Term Growth '06/'08 AGR * 33291 Valves/Fittings -2% -0.9% 333120 Construction +2.1% -0.4% Equipment 333131 Mining Machinery +4.5% -0.2% 333132 Oil Field Equipment +2% -2% 333911 Pumps +5.4% +0.8% 33612 Trucks & Military -8.6% -7% 3365 Railroad -23.7% -3.2% TOTAL -11.4% -2% NAICS Forecast Factors 33291 Imports high 333120 Loss to ductile iron 333131 Imports up 333132 Peak in 2006/08; High oil prices 333911 Petrochemical, chemical up 33612 Substitution by ductile iron 3365 Freight car deliveries peak in 2006; Drop to normal levels TOTAL Loss of 170,000 tons by 2008 as railroad usage moderates * Average Annual Growth Rate 2006-16 Table 4. Short- & Long-Term Market Summary for Aluminum Castings Shipments NAICS Industry Short-Term Long-Term Growth '06/'08 AGR * 33361 Internal Combustion +1.5% +0.7% Engines 333991 Power Tools +2.2% +0.7% 33341 Computer/Office +0% -4% 3334 Refrigeration/AC +9.1% +1.8% 334514 Meters & Regulators +6.1% +0.6% 3352 Household Appliance +5.4% +1.3% 3361 Motor Vehicles +3.4% +1.9% 3364 Aircraft & Parts +6.1% +1.2% 3345 Instruments +4% +1.4% 3421 Marine & Other +8.8% +1.5% TOTAL +4.5% +1.5% NAICS Forecast Factors 33361 Growth in lawn/garden & sport engine vehicles 333991 Loss to magnesium, plastics 33341 Loss to plastic; Decline in main frames 3334 Replacement of gray iron 334514 Growth in housing starts; Loss to plastics 3352 Replacement of gray iron; Loss to plastics 3361 Conversion of blocks, heads, suspension & differential parts; Growth to 280 lbs. of AI per vehicle; Loss to plastics/Mg 3364 Loss to titanium, imports 3345 Parallels industry growth 3421 Growth market TOTAL Gain 105,000 tons in '06/'08 * Average Annual Growth Rate 2006-16 for Copper-Base Casting Shipments Table 5. Short- & Long-Term Market Summary NAICS Industry Short-Term Long-Term Growth '06/'08 AGR * 332913 Plumbing/Sanitary +1.9% -2.3% 332911 Industrial Valves +1.9% -2.5% 332510 Marine +5.3% +1.9% TOTAL +4.9% -0.6% NAICS Forecast Factors 332913 Loss to plastics, imports 332911 Imports gain 332510 High market gain TOTAL Gain 16,000 tons by 2008 * Average Annual Growth Rate 2006-16