Upturn forecast for second half of '02, 3% growth expected. (Casting Market Trends).

Interviews with major consumers of metal castings in the U.S. reinforce earlier forecasts that call for a recovery in casting demand in 2002. An overall growth of 3.3% continues to look probable, though some metals are expected to experience another year of losses.

Production of light vehicles in the U.S., which dropped 11.3% in '01, is expected to rise 3.2% this year, an increase of 360,000 units. Medium to heavy truck production, which suffered a 29% loss last year, is predicted to recover 17% this year. Production of railroad freight cars, meanwhile, is forecast to see little or no growth over '01 levels, which were down 41% from '00. Housing starts are expected to continue to increase and post a 2.1% gain this year.

Imports from China, Korea and other Asian nations are predicted to propel. total casting imports to 15% in '02 and keep shipments down despite a demand recovery in many market sectors.

Gray Iron

Gray iron casting shipments fell 11% last year, and are expected to drop another 2% in '02 as demand contracts in major market sectors.

Motor Vehicles--As conversions to aluminum accelerates, gray iron consumption in light vehicles is expected to continue its decline in '02 with an 11.9% drop, followed by another minor drop in '03. Consumption in light vehicles is expected to drop 700,000 tons in '03 from its 2-million-ton high in '97.

Diesel Engine--After the big decline in medium to heavy truck production in the U.S. last year, gray iron casting shipments to this sector are forecast to increase 7% this year. Imported gray iron blocks, heads and other castings are now 30% of the total demand for this sector.

Machine Tools--Down 30% in '01, machine tool production in the U.S. is expected to rise 8% this year. Still off by 45% from '97's peak, gray iron casting shipments are not expected to return to such levels for at least 5 years due to foreign competition.

Municipal Castings--Despite increased pressure from imports (which has now reached 32% of demand), gray iron shipments are expected to rise 2% this year with the increase in housing starts.

Pumps & Compressors--The rebound of the gas compressor business late last year is expected to carry into '02 and spur a gain in casting demand. The turnaround in casting demand that began in '01 is forecast to continue this year and result in a growth of 1.5%.

Special Industry Machinery--After a 9% total decline of machinery shipments occurred last year, demand is expected to rise 4% this year. A resurgence in food products, printing and packaging machinery should increase the consumption of gray iron castings to 207,000 tons in '02.

Ductile Iron

After shipments of ductile iron castings fell 9% last year, a 5% increase is forecast based on the increased demand for motor vehicles and pressure pipe.

Pressure Pipe--Despite substitutions by PVC and concrete pipe, ductile iron pipe is forecast to grow from 1.8-million-ton levels to 2 million tons by '04. Growth in exports is expected for the next 5 years.

Motor Vehicles--Ductile iron's usage in light vehicles dropped 16% last year, but is expected to grow 3.5% this year and 12.5% in '03 as light vehicle sales increase in the U.S. The conversion of suspension castings, differential castings and brake parts to aluminum has accelerated, however.

Construction Machinery--While construction activity saw a slight gain in '01, the loss in exports hurt machinery shipments in the U.S. and caused a 2% drop in casting usage. With the expected increase in exports and gains in residential, commercial and public construction, a 3% increase in ductile iron shipments is forecast.

Oil Field Equipment--Following the 14% drop in ductile iron casting consumption to this market in '99, shipments are forecast to grow for the third consecutive year in '02 with a 7% gain.

Steel

Based on the continued decline in freight car deliveries, steel casting shipments are forecast to rise only 4% this year to 1.2 million tons.

Railroad--Steel casting shipments for railroad applications fell 26% to 467,000 tons in '01. Freight car shipments are expected to rise to only 36,000 cars this year, limiting steel casting demand to 488,000 tons.

Mining & Oil Field Equipment Machinery--The resurgence of the energy-related industries has kept steel casting shipments strong in these industries. A continued growth of 6% is forecast for '02.

Valves--Steel casting consumption in the valve industry is forecast to rise 4% this year and increase annually through '08.

Aluminum

The anticipated acceleration of conversions to aluminum in automotive applications, combined with an increase in light vehicle production, are forecast to spur an aluminum casting rise of 9% in '02 to 2.04 million tons.

Motor Vehicle--Aluminum casting shipments to this sector fell 7.5% to 1.12 million tons last year. With the expected increase in motor vehicle production and the accelerated conversion of blocks and heads to aluminum, an 11% gain in aluminum casting shipments (to 1.24 million tons) is forecast for this year.

Aerospace--U.S. aerospace industry sales are expected to decline in '02. Casting shipments are expected to drop slightly to 80,000 tons.

Copper-Base

Despite gains in the marine and industrial valve markets, brass and bronze castings are not expected to gain in total due to the loss of plumbing supplies to plastics and imports.

For a free copy of this article circle No. 339 on the Reader Action Card.

This article was adapted from the Spring 2002 edition of the AFS Metalcasting Trends newsletter distributed to AFS Corporate Members.

Macro-Level Forecasts

                                     2001       2002       2003

GDP                                 +0.6%      +2.1%      +3.3%
Housing Starts                      +2.0%      +2.5%      +4.0%

Motor Vehicle Production
 (Units "produced" in the
 U.S., not "sales")

  Cars                          4,790,000  4,950,000  5,700,000
  Light Trucks                  6,250,000  6,450,000  6,700,000
Medium/Heavy Trucks               255,000    300,000    360,000
Freight Cars (Units Delivered)     33,000     36,000     50,000
Revised Forecast for 2001-2005

Metal         2001  2002  2003  2004  2005

Gray Iron     5041  4986  5150  5250  5330
Ductile Iron  3950  4150  4440  4680  4910
Steel         1180  1230  1370  1480  1540
Aluminum      1920  2080  2320  2540  2670
Copper Base    300   303   314   322   326