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Forecast '93: ductile iron to spur ferrous casting recovery.

Stronger domestic economy, weaker import pressures, growing export markets and improved plant use point to good 1993, better 1994.

Shipments of metal castings in the U.S. are forecasted to increase nearly 9% in 1993. The third quarter growth of 1992 is expected to continue, spurred on by growth in motor vehicle sales, durable goods consumption and building activity.

This forecast is based on a predicted GDP growth of 3.4%, a 6% rise in durable goods production and an 8% increase in construction activity. The U.S. automotive industry is expected to increase shipments of passenger cars and trucks from near 10 million to 11.6 million units, a 16% improvement.

Despite the recession in Europe that isn't expected to improve until the third quarter of 1993, exports of U.S. castings will continue to grow. Combined with a reduction of imports in key market segments and the rising demand for castings in the U.S., this means increased shipments to most market segments.

Ductile iron and aluminum are expected to lead the 1993 casting demand recovery. The forecast for ductile, gray and malleable iron casting shipments appears in this issue of modern casting. The outlook for steel, nonferrous and investment castings will be presented in the February issue.

Pipe Production

Ductile iron shipments, led by pressure pipe (46%) and motor vehicles (37%), are expected to increase nearly 3.9 million tons in 1993.

Due to increased U.S. building activity and exports to Third World countries, pipe production is expected to reach 1.8 million tons. This rise is based on the following factors:

* Erosion of the marketplace by PVC will continue, but at a lower rate because of regional environmental laws prohibiting its use.

* Use of cement/asbestos pipe has been prohibited in many areas.

* Prestressed concrete pipe has had premature fracture problems and is to be replaced by large ductile iron pipe in some areas. It will, however, continue to be competitive.

* An annual increase of 3% per year in residential and nonresidential building is forecast from 1992-2002.

* Exports to Third World countries are predicted to grow, especially if the dollar remains somewhat stable.

Cars and Light Trucks

U.S. production of passenger cars and light trucks is expected to reach 11.3 million units in 1993. Ductile iron castings, at 175 lb/unit, should reach 980,000 tons in 1993. Much of this gain is due to the high U.S. production of light trucks, targeted at 37% of all cars and light trucks produced in 1993. Several factors will contribute to these gains.

* Imports will continue to fall and exports will rise based on the outlook for a stable dollar. Many foreign cars will be U.S.-made. Transplant vehicle production could hit two million in 1993. U.S. car and truck exports and U.S. sourcing of parts will increase from both traditional U.S. suppliers and a higher number of U.S.-based Japanese affiliates.

* The number of automotive casting plants will shrink, causing supply problems as demand increases. This will encourage partial dependence on offshore foundries.

* Exchange rates and the stable dollar will reduce auto imports from Japan and Germany, but casting imports from some Third World countries will increase. A net decrease in imports of 3% per year is expected.

Ductile Iron Demand

Demand for ductile iron in the automotive passenger car and light truck industry should increase 1.5% annually from 1992 to 2002. Its usage is affected by the same conditions that affect gray iron except for additional considerations that increase the rate of growth. Among these are:

* Front-end drive in small passenger cars reduces the need for some differential carriers and cases; carriers are required in the fast-growing light truck market.

* Many crankshafts will remain in ductile iron but will be smaller because of more I-4 engines. Some OEMs have changed to forgings. Crankshaft weight in in-line engines will increase.

* Austempered ductile iron castings will replace forgings in shafts and gears.

* Ductile iron continues to replace malleable iron and steel castings.

* Imports will fall to 5% of demand, and exports will exceed imports.

* Safety parts, including knuckles, spindles, and control arms, continue as the major application of ductile iron.

* CAFE regulations could increase the use of aluminum and aluminum composites for brake and suspension system applications.

Ductile iron casting shipments for use in heavy trucks will rise to 166,000 tons in 1993 due to several factors:

* Growth of the heavy truck market is expected to grow to 370,000 units.

* Ductile iron will replace malleable iron and steel castings.

* A partial replacement of cast steel by ferritic annealed ductile iron with equivalent resistance to low-temperature impact in rear-end banjo housings and other applications.

Valves & Fittings--Despite heavy imports of malleable and ductile iron fittings from Thailand and Taiwan, a near 10% increase is forecasted for U.S.-made valves and fittings based on an expected increase in housing starts. The following factors have been considered in this forecast:

* Industry shipments project an average annual increase of 2-3% through 1996.

* Strong demand for fittings from energy-related industries should compensate for the slow demand from commercial construction.

* Increased global air and water quality concerns are opportunities for U.S. valve and pipe fittings.

* Exports, especially to Russia and Eastern Europe, present significant growth markets.

* Large power and sanitation projects overseas could lead to increased U.S. exports.

Ductile iron valve castings will continue to replace malleable iron valves because of their superior resistance to shock and impact. Ductile iron valve castings are expected to increase to 207,000 tons in 1993 from the 190,000 tons projected for 1992. Malleable iron fittings replacement by ductile iron is not forecasted in the short term, pending specification changes.

Specialized Machinery--Continued growth of ductile iron used in printing, paper mill, plastic and other specialized machinery has led to a 17% growth in ductile iron shipments to over 100,000 tons. Shipments of printing machinery, a ductile iron growth market, slowed in 1991 due to the slowdown in commercial printing. Industry shipments in constant dollars will grow at a compound annual rate of about 3% during the next five years.

The paper industry, always a large ductile iron consumer, has invested heavily in R & D and upgrading machine tools rather than increasing plant capacity. A new demand for paper products and paper machinery in Eastern Europe and Russia has been created with the spread of democracy and economic liberalization. Between 1992-96, the industry's compound annual growth rate will exceed 3% in constant dollars with most of this growth expected after 1994.

Engines--Ductile iron engine castings are expected to increase from 70,000 tons in 1992 to 78,000 tons in 1993. The excellent growth rate is due to the replacement of malleable iron and the use of ductile iron for flywheels, exhaust manifolds, bearing caps and crankshafts. Crankshaft casting production is a major breakthrough. Ductile Ni-Resist and high-silicon ductile iron are also being specified for turbocharger housings and exhaust manifolds.

Compacted graphite iron (CGl) is being used in engine castings for flywheels, housings and covers by major captive producers. It replaces gray iron where thermal conductivity, increased strength or superior machinability and/or castability over ductile iron are needed. CGl, however, is expected to show little future growth. Approximately 12,000 tons are forecasted for 1993.

Farm Equipment--The economic health of the farm equipment industry is subject to influences beyond its control such as global weather and foreign and domestic agricultural policies.

Ductile iron castings for farm equipment and machinery are expected to increase from 120,000 tons in 1992 to 150,000 tons in 2002, an annual growth rate of 2.3%. Shipments of 140,000 tons are forecast for 1993. Ductile iron will continue to replace steel, malleable and gray iron castings, expanding at the industry growth rate as gray iron usage declines.

Construction Machinery--Industry growth of construction machinery will be affected not only by changes in the U.S. economy, but also by the pace of foreign economic development. Demand for new equipment will come mostly from building construction, surface mining and public works. Industrial shipments are projected to grow about 2.2% per year during the 1992-96 period.

Ductile iron castings in construction and oil field equipment should increase in the long term from 191,000 tons in 1992 to 216,000 tons in 1993 and grow at a rate of 3.2% per year to 2002.

The ductile iron forecast calls for increased use for electrical fitting castings at a 10-year annual rate of 8.2% in the conversion from malleable iron. Pole line hardware castings will also show continued growth.

Gray Iron Outlook

Figure 2 shows the long-term demand for gray iron castings is expected to decline in the U.S. at a rate of 0.7% per year. However, a 9% increase over 1992 is forecasted based on increases in car and machinery sales.

Gray iron casting shipments are expected to decline from 5.3 million tons in 1992 to 4.95 million tons in 2002. Short-term shipments are expected to increase to 5.85 million tons in 1993 and peak at 6.2 million tons in 1994 before beginning a slow decline.

Car & Light Truck--Shipments of gray cast iron for the automotive passenger car and light truck industry declined an average of 4.8% a year through 1970-81, a total of 42%. A further decline of 2.5% a year is expected between 1992-2002 reflecting less iron per car.

Gray iron castings in passenger cars and light trucks is forecasted to increase from 1.4 million tons in 1992 to 1.6 million tons in 1993, based on increased vehicle production. In the long term, however, consumption will decline by 2.5% per year to a consumption of 1.1 million tons in 2002.

It is reported that total U.S. gray, ductile and malleable iron castings' capacity to fill U.S. automotive demand (passenger cars and light trucks), plus export, has declined from 5.5 million tons in 1989 to the current 3.4 million tons. This capacity is expected to decline further to two million tons by 1995. The forecasted decrease in total iron usage per passenger car and light truck ranges from approximately 600 lb in 1978 to 200 lb in 2002.

We now estimate that 30% of U.S. cars and light trucks will have aluminum blocks by 1998. This will gradually increase to 50% by the year 2002. Heads will be nearly 100% aluminum by 2002.

Municipal Castings--Gray iron municipal castings for use in highway and street construction are expected to grow 9% in 1993 as construction activity picks up. Heavy imports from India, Brazil, China and Mexico continue despite relatively heavy anti-dumping tariffs. Soil pipe and fittings continue to suffer from competition from plastics for sewerage and water in many municipalities, forcing prices down. However, demand is up 0.89% or 11% in surplus capacity.

Ingot Molds--Gray iron for ingot molds will continue to decline as shipments dropped to 410,000 tons in 1992. Shipments in 1993 are estimated at 450,000 tons but are forecasted to drop to 300,000 tons by 2000, a loss of nearly three million tons compared to peak years in the '70s. Continuous casting for steel production is expected to reach 90% in the '90s, reducing the need for ingot molds except for specialty steels.

Valves & Fittings--The market for gray iron castings for valves and fittings is primarily dependent on housing starts, which dictate the water and wastewater market where growth is forecasted. Stiff competition is present in smaller valves, where 40% of the pieces are less than 50 lb. Competition from Brazil, Canada, Korea, Taiwan and China continues but imports are forecasted to drop as the U.S. dollar stabilizes. Plastic is competing with iron for some smaller fittings and joints, especially for PVC pipe.

U.S. shipments of gray iron valve castings are forecasted to increase from 260,000 tons in 1992 to 280,000 tons in 1993. A low long term growth of 0.6% a year is predicted due to intense competition from Asia.

Diesel Engines--The greatest demand for iron castings is in blocks, heads, manifolds and other castings, which totaled 380,000 tons in 1992. Forecasted growth is 1.7% compounded annually between 1992-2002. Based on predicted recovery rates in trucks and farm construction equipment, an increase in shipments to 420,000 tons is expected in 1993.

Mining--The forecasted growth in U.S. mining will provide a continuous market for abrasion-resistant iron castings. Long-term demand for castings is based on a growth of 2.5% per year from 1992 to 2002. Gray iron castings should increase from 33,000 tons in 1992 to 39,000 tons in 2002, an increase of 1.7% per year with a short term growth to 37,000 tons.

Machine Tools--Gray iron for machine tools is normally Class 30, 40, 50 and 60 irons for castings ranging from ounces to 100,000 lb lathe beds and machinery bases. Manufacturers have gradually closed or sold their captive foundries and now rely on outside suppliers for 78% of their total tonnage. New Japanese transplants, (i.e., Okuma and Mazak) are now major purchasers of castings. The demand for gray iron in machine tools is to grow to 230,000 tons in 1993.

Rolling Mills--Rolling mill machinery is primarily dependent on raw steel demand. Rolls used in mill machinery are normally chilled and alloyed iron. It is forecasted that U.S. shipments will decline at a rate of 3% a year from 30,000 tons in 1992 to 22,000 tons of castings in 2002, but 1993 tonnage is expected to peak near 31,000 tons.

Pumps & Compressors--Shipments of gray iron for pumps and compressors are forecasted to increase from 194,000 tons in 1992 to 220,000 tons in 1993. High-production, lightweight Class 30 iron castings for refrigeration, air conditioning and heating equipment are expected to increase to 126,000 tons in 1993, a 4% increase.

Malleable Iron

The declining malleable iron market will reach 226,000 tons in 1993. It continues to be used by GM for automotive parts such as connecting rods and yokes, although replacement by other metals and processes is predicted.

The plumbing and fitting business is being eroded by imports from Thailand as well as conversions to ductile iron. Total malleable iron shipments in the U.S. are forecasted to decrease to less than 100,000 tons by 1997.
COPYRIGHT 1993 American Foundry Society, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
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Title Annotation:part 1
Author:Kirgin, Kenneth H.
Publication:Modern Casting
Article Type:Cover Story
Date:Jan 1, 1993
Previous Article:Five metalcasting executives earn foundry management awards from AFS.
Next Article:Understanding inclusions in aluminum castings.

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