Casting demand improves in first quarter.
Though the production of light vehicles fell 1.5% in the first quarter, growth in March was near 5%, and steady growth in subsequent quarters is expected to bring the annual vehicle production to 12.4 million, an increase of 4.8% over 2003. Medium to heavy truck and trailer production was up in the three months and this growth is expected to continue and increase shipments by 25% for the year. Orders lot freight cars in 2003 was almost double that of 2002, and are expected to result in a 40,000 car delivery year in 2004, providing impetus to a sizeable gain in steel casting demand
Based on these demands and other first quarter statistics, an overall increase of 4.6% is reforecast for the total metal casting shipments in 2004. A recent analysis of casting imports has resulted in new forecasts of Imports/ Demand ratios affecting casting shipment projections.
Gray iron shipments are forecast to rise 2.3% in '04 to 4,851,000 tons.
Motor Vehicles--The conversion of blocks and heads to aluminum continues to accelerate and is expected to lower the average weight of gray iron per light vehicle to 206 lbs. in 2004. The use of iron in engine blocks is forecast to drop to 50% in 2005 while iron heads decrease to 7% of the light vehicles. The percentage of light vehicles that are classified as light trucks is maintaining its 60% level in 2004, thus delaying the conversion of some blocks to aluminum. Transplant production, now approximately 21% of the U.S. production of light vehicles, utilizes aluminum in 80% of the blocks and 100% of the heads.
Gray iron casting shipments for light vehicles were expected to grow slightly in 2004, however, the increase in the import to demand ratio to 0.28 has caused a reforecast to 1.12 million tons. a 3.3% loss from 2003. The rebound of medium to heavy truck production in the first quarter is expected to continue throughout the year and increase gray iron shipments to this market sector by 25% in 2004
Internal Combustion Engines--The predicted increase in truck production in 2004 was expected to result in an increase in iron casting shipments for diesel engine manufacturers, however, imports of iron castings have risen to 50% of demand, causing lower shipment predictions along with an increase in foundry closings in this market sector. A revised forecast of 400,000 tons of gray iron shipments in this classification is indicated.
Metalworking Machinery---Gray iron consumption in machine tools continues to fall to new lows as this sector has moved offshore, reducing shipments of gray iron castings to 50,000 tons for machine tools and 102,000 tons for all metalworking machinery.
Valves & Fittings--The import to demand ratio has now risen to an estimated 0.37 for gray iron valve and fitting parts, keeping shipments down despite increases in demand. Shipments of 272,000 tons are forecast for 2004.
Pumps & Compressors--Growth in oil field equipment, construction and general industrial usage is expected to result in an increase of gray iron casting usage in these industries in 2004.
Total shipments of ductile iron castings are expected to increase 5.1% in 2004 to 4,436,000 tons (Table 1).
Pressure Pipe--Based on a good year in housing starts and commercial construction, along with an increase in exports, shipments of ductile iron pipe are expected to increase to 2,060,000 tons in 2004.
Motor Vehicles--The average weight of ductile iron castings per light vehicle is expected to drop to 184 lbs. as the conversion of suspension castings to aluminum increases. A continued high percentage of light truck production, however, should assist in a rise in shipments in 2004 to 1.1 million tons. Ductile iron usage in suspension castings is expected to drop to 45% of the light vehicles in 2005. Aluminum is also forecast to replace ductile iron in many differential cartier applications. Austempered ductile iron applications continue to grow as replacements of forgings gain.
The expected increase in the import to demand ratio to 0.20 is expected to keep shipments down in the future despite an increase in demand as light vehicle production increases. Ductile iron casting shipments for the medium to heavy truck market sector are expected to grow to 206,000 tons in 2004--a 20% increase over 2003.
Special Industry Machinery--The printing, plastic, paper and textile machinery industries are expected to grow in 2004 and 2005. Ductile iron shipments are forecast to grow to 100,000 tons in 2004. A 2.2% annual growth rate of ductile iron shipments is forecast for the long term.
Farm Machinery & Equipment--Based on the forecast of a 3.0% increase in farm machinery production in 2004 and conversion of new applications to ductile iron, a 5.3% increase in shipments of ductile iron is forecast.
Steel casting shipments are forecast to grow to 1,148,000 tons in '04, a 9.6% rise.
Railroad--Based on forecasts by key industry persons, 40,000 freight car deliveries will be made in 2004. Based on this forecast and other forecasts for locomotives and other railroad applications, 448,000 tons of steel castings are to be shipped by U.S. metalcasters in 2004 for this market sector. The original estimate of 488,000 tons was made based on a 0.12 import to demand ratio and other estimates. The revised shipment of 448,000 tons was made on an estimated 0.18 import ratio. Future forecasts estimate a higher import ratio.
In 2003, orders for freight cars increased more than 60% over 2002. This factor plus an increase in orders in the fourth quarter of 2003 has been used as a basis for forecasting the increase to 40,000 car deliveries in 2004 and 48,000 deliveries in 2005.
Construction, Mining & Oil Field Equipment--The reduction of 50,000 tons in steel casting shipments was based on a more recent analysis of imports and increase in the import ratio to 0.15 in the three categories. It is now forecast that shipments of 350,000 tons are to be made in 2004 in these market sectors.
Corrosion Resistant Steels--Despite the increase in imports of stainless steel valve components to 20% of demand, it is expected that corrosion resistant steel shipments are to grow to 89,000 tons in 2004
A revised forecast for aluminum die castings and permanent mold and sand castings follows.
Aluminum Die Castings--Aluminum die casting shipments in '04 (Table 2) are forecast to increase by 8% over '03 levels to 1,338,000 tons. The slight downward revision in the automotive sector is due to the reduced forecast for car production. Die castings represent about 57% of the total aluminum consumed in automotive vehicles.
Aluminum Permanent Mold & Sand Castings--Aluminum permanent mold and sand castings are forecast to increase in 2004 by 9.3%. The accelerated conversion of iron engine blocks and cylinder heads to aluminum has spurred the growth of these processes.
Shipments of copper-base bronze and brass castings are forecast to rise by 2.3% in 2004.
Table 1. Ductile Iron 2003 Shipments, Original & Revised 2004 Forecasts (thousands of tons) Original Revised NAICS Industry 2003 2004 2004 33291 Valves & Fittings 215 222 222 331151 Pressure Pipe 2010 2060 2060 333618 Internal Combustion Engine 80 103 94 33311 Farm Machinery & Equip. 114 124 120 333120 Construction Mach. & Equip. 187 203 203 333132 Oil Field Equipment 66 73 73 33351 Metalworking Machinery 41 42 43 33329 Special Industry Machinery 98 102 100 33391 Pumps & Compressors 82 86 86 333612 Gears, Power Transmission 26 29 29 3334 Refrigeration/A.C. 38 43 42 335312 Electric Machinery 15 18 18 33611, 3363 Light Vehicle 1034 1117 1100 336120 Medium to Heavy Truck 164 229 206 Other 50 47 40 TOTAL 4220 4498 4436 Table 2. Aluminum Die Casting 2003 Shipments, Original & Revised 2004 Forecasts (thousands of tons) Original Revised NAICS Industry 2003 2004 2004 33361 Internal Combustion Engine 78 87 85 333112 Lawn & Garden 20 20 21 333991 Power Hand Tools 27 28 28 33341 Computer & Office Equip. 46 48 48 3334 Refrigeration/A.C. 35 39 39 3352 Household Appliances 45 46 46 3361 Motor Vehicle 731 822 800 3364 Aircraft 19 21 21 Other Aluminum Die Casting 238 253 250 Total 1239 1364 1338
RELATED ARTICLE: Examining casting supply.
The metalcastng industry has changed significantly in the last 50 years. In 1955, there were 3,100 metalcasting facilities with less than 20 employees and 3,050 with more than 20 employees, a total of 6,150. By 1985 the total had dropped to 4,010. Figure 1 shows the continued fall in suppliers of castings in the last 20 years to an estimated 2,420 plants in 2004.
[FIGURE 1 OMITTED]
The reduction of casting capacity in tons experienced in the same period has not been as dramatic because aluminum capacity has increased while gray iron and steel capacity has dropped off considerably. Figure 2 indicates the estimated revised breakdown of capacity and utilization for 2004.
Fig. 2. Shown is the estimated casting capacity and utilization in 2004. Capacity (thousands Metal of tons)(*) Utilization(%) Iron 11700 80 Steel 1480 78 Aluminum 2950 79 Copper Base 400 77 Magnesium 150 85 Zinc, Lead 400 80 Other Nonferrous 70 78 Investment Cast. 200 82 Total 17,350 79 * capacity is estimated based on 1 and 2 shift operations.
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|Title Annotation:||Casting Market Trends|
|Author:||Kirgin, Kenneth H.|
|Date:||Jun 1, 2004|
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