Casting supplies to tighten in '98.
Spurred by forecasts for record automotive shipments, increased production of farm and construction equipment, and boom economic conditions in the U.S. in 1998 and '99, casting shortages are anticipated.
Because of an expected supply capacity of nearly 17 million tons in 1998, a demand/supply ratio of 0.88 could exist for all metal castings, causing casting shortages in specific size and quantity ranges in major metal market sectors. A continued reduction of captive capacity is also expected that will, in all likelihood, cause domestic shortages in non-captive supply to many market sectors.
Gray and Ductile Iron
Definite supply problems are forecasted with gray iron castings in the 050 lb and 51-150 lb weight ranges in the medium- to high-quantity production categories. In the weight range category of oz to 50 lb, the demand/supply (D/S) ratio is forecasted at 0.93 for gray iron, indicating a surplus of supply of 122,000 tons in 1998, when using the supply estimate for 1997.
For vertically parted molding machines, the gray iron demand is forecasted at 1.5 million tons (including some castings in the 51-150 lb range), resulting in a 0.92 D/S ratio, despite the addition of capacity by the top two foundry organizations. This indicates potential supply problems in specific market sectors, especially when you consider the planned reduction in captive capacity in this weight range.
The ductile iron situation could be even more critical since planned capacity additions are not as significant. In the 0-50 lb range, a D/S ratio of 0.94 is expected, which will lead to a supply surplus of 90,000 tons. In the vertically parted mold category the surplus could be fewer than 70,000 tons for a demand of 1.25 million tons, leading to a possible critical shortage of supply in 1998 and '99.
The demand for medium- to high-production quantity gray iron castings in the 51-150 lb weight range in 1997 is 1.62 million tons, resulting in a 273,000 ton surplus of supply. The forecasted demand for 1998 is 1.75 million tons.
Based on the 1997 supply estimate, the surplus is reduced to 146,000 tons, or by 8%. Captive supply is approximately 40% in this weight range and is forecasted to be reduced to 25%. As a result, a possible shortage of domestic casting supply from non-captive suppliers could exist during 1998-99.
Most other categories of weight ranges offer healthy utilization ratios with adequate capacity to fulfill domestic demand.
Other factors that could affect the D/S conditions are the increased potential for exports to the growing European and Asian economics and the continued closing of captive facilities in the U.S.
It is expected that shortages in the domestic supply of non-railroad castings will potentially exist in heavy castings (weighing over 10,000 lb) in carbon and low alloy steels, as well as in stainless steels over 5000 lb.
Since railroad freight car production is expected to drop off from its high of 60,000 cars in 1995 to 42,000 in 1997 and 44,000 in 1998, a surplus of steel railroad casting capacity could result.
Aluminum casting demand is expected to grow 6% in 1997 and an additional 11% in 1998. This growing demand is likely to lead to some supply shortages.
These potential supply problems could crop up in the automotive permanent mold casting sector, as block, head and manifold casting demand accelerates in 1998 and 1999. The forecast indicates that only 16,000 tons of surplus will exist in 1998. This could turn into a definite shortage of supply in 1999 as head and block conversions peak.
Most major aluminum diecasters specialize in specific automotive applications, and they are expected to expand to meet the heavy requirements in 1998-99.
At the same time, low pressure permanent mold equipment is being installed in U.S. facilities to meet wheel and head requirements. Also, GM has expanded its lost foam operations to meet its aluminum engine requirements at Saturn.
Brass and bronze casting shipments are expected to grow 1% in 1997 and 11 % in 1998 to 321,000 tons. The forecasted D/S ratio for 1998 is 0.80, or a surplus of supply of about 80,000 tons.
It is estimated that a zinc die casting supply surplus of 70,000 tons may exist in 1998.
Investment casting shipments are expected to increase 3% in 1997 and an additional 12% in 1998. The D/S ratio is estimated at 0.80, resulting in a surplus of supply of 45,000 tons in 1998.
The reduction of captive capacity in the metalcasting industry has had a significant effect on non-captive and jobbing foundry utilization. Gray iron captive capacity is forecast to drop to 36% of demand in 1997--a drop off of 206,000 tons in the past two years. This is a 10% reduction to 1.8 million tons per year of captive capacity. It is expected that an additional 20% of captive foundry facilities will close by 1999. These closings have meant an increase of nearly 200,000 tons of business per year to gray iron jobbing foundries.
Ductile iron captive capacity has also been reduced with the closing of Deere, Case, GM and other facilities. Captive capacity is now estimated at 26% of total demand, or 570,000 tons. This reduction has increased available jobbing business by 133,000 tons in the last several years.
Captive capacity of steel castings as a percentage of demand is estimated at 6%, while aluminum is 22%.
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|Author:||Kirgin, Kenneth H.|
|Date:||Sep 1, 1996|
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