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Solid casting markets fuel 1997 expansion.

Major markets continued strong in '96, and are expected to lead to an even better casting demand in '97 . . . and a peak year in '98.

After a very soft landing in 1996, economists are fore, casting continued expansion of the economy to the end of the century. The consensus of interviewed economists indicates continued growth in the gross domestic product (GDP) during the next three years. Some groups, such as DRI/McGraw Hill, expect steady growth through 1999, while others go even further.

Our forecast is based on these optimistic predictions, combined with parallel growth in the European and Asian economies. This could lead to new peaks in casting demand for the next three years.

Individual industry forecasts vary depending on the technological changes within the industry; however, most are forecasting expansion through at least 1999.

The motor vehicle industry, spurred by increasing transplant production in the U.S., is anticipating short-term growth to record highs, especially in the light track category. Construction equipment will benefit not only from the projected increases in building activity, but will also take advantage of vast export markets as the worldwide economy reaches peak conditions at the same time.

Even the railroad business, which remained rather stagnant after the 1983 low, has bounced back to high demand levels and is expected to remain a strong market sector.

Although some casting markets are being lost to competitive materials, the industry as a whole has withstood the technological changes of the past decade or so and is now maturing and growing with the economy.

Casting Shipments

Based on the expected economic expansion in the latter half of 1997, and continued growth in 1998 and 1999, the short-term forecast for casting demand is bullish for the U.S. foundry industry. As shown below, shipments of metal castings are forecast to increase 2.7% in 1997 and continue to increase in 1998 and 1999. The long-term forecast for 1996-2006 shows a 1.6% per year increase to 15.906 million tons. Only a projected recession in 2000 and 2001 will slow down the overall growth trend.

Casting sales are expected to grow to $25.2 billion in 1997 and continue to rise to $36.3 billion by 2006. This growth will continue to be led by ductile iron and aluminum, which are expected to reach record levels during the next 10-year period. If current trends hold, ductile iron is expected to pass gray iron in sales in 2004 and become the shipment leader for ferrous metals. Sales of aluminum castings are expected to achieve $10.6 billion in 2006, or 29% of the total metalcasting revenue.

Although total shipment growth is modest, it does indicate that this mature industry - which has suffered a long-term decline of 10.6 million tons from its 21.9 million ton high in 1973 to its low of 11.3 million in 1991 - is now beginning to follow the general trends in the overall economy. Technological changes continue to affect the individual product segments, however, the industry as a whole is healthy and important to our industrial economy.


Ferrous casting shipments, which dropped to their lowest level in 50 years in 1991 at 9.5 million tons, are expected to grow in the short-term to 11.5 million tons in 1997 and 12.2 million tons in 1998.

Gray Iron

Shipments of gray iron castings, which have remained fairly level for the past three years, are expected to increase slightly to 6 million tons in 1997 and then peak in '98 and '99 to annual levels of 6.4 million tons.

Light Vehicles - Passenger car and light track production in the U.S. peaked at 12 million vehicles in 1994 and is expected to surpass that number in 1998 and '99 at 12.5 million units per year. The major factor influencing the growth is the continuing increase of transplant production in the U.S. While these transplants are expected to gain a greater percentage of the market, they are replacing imports at the same time.

Gray iron shipments for light vehicle consumption are forecast to grow slightly to 1.942 million tons in 1997 and increase to more than 2 million tons in 1998 and '99.

Medium to Heavy Trucks - Use of gray iron in medium-to-heavy trucks is projected to grow to 260,000 tons in the long-term as brake part applications grow with track and trailer demand. Shipments of these trucks are forecast at 350,000 vehicles in 1999.

Municipal Castings - During 1997, housing starts are expected to increase by 5% while commercial construction grows 2%. Overall construction activity is expected to grow by some 4%. Despite this trend, imports continue to plague this sector of the industry.

Soil Pipe - While building activity is expected to increase at an annual rate of 2.5%, conversion to plastic pipe has been forecast to run at about a 5% rate annually. This continued erosion of the demand for gray iron is expected to lower the shipments to 220,000 tons in the long-term.

Ingot Molds - The use of gray iron in ingot molds, stools and other molds is expected to drop to 180,000 tons over the next decade, representing a decline of 1.7% per year. Shipments in 1997 are estimated at 225,000 tons.

Sanitary and Radiator - Housing starts are expected to increase 5% in 1997; however, sanitary castings are expected to decline slightly. Shipments of boiler and radiator castings are expected to increase by 7000 tons over 1996, spurring the total shipments in this classification to grow to 300,000 tons.

Valves & Fittings - Gray iron valve castings are forecast to grow from 263,000 tons in 1996 to 268,000 tons in '97 and post a long-term growth rate of 1.5% per year.

Internal Combustion Engines - Gray iron shipments are expected to rise to 500,000 tons in 1997; an increase of 3.5%. These shipments include engine block and head consumption for U.S. diesel engine manufacturers. Annual captive production is 48% of the total.

Farm Machinery & Equipments - Shipments of farm machinery are expected to increase 3% in 1997 and have a long-term growth of 2.3% per year. Gray iron castings, excluding diesel engine castings, will grow to 330,000 tons in 1997.

Construction Machinery & Equipment - Shipments of construction equipment are expected to increase at a rate of 3% per year, which will be spurred by growth in exports. Exports normally represent 34% of total shipments. Gray iron castings for these applications are expected to have another good year in 1997 and grow to 203,000 tons.

Mining Machinery - Shipments of mining machinery are projected to grow 2% in 1997 and 8% in '98. Gray iron shipments to this market are expected to remain stable in 1997 at 35,000 tons.

Machine Tools - The machine tool market continues to remain healthy in the U.S., spurred by the automotive industry and growth in exports, which have tripled during the last 10 years. Use of gray iron castings in these applications is expected to grow to 129,000 tons in 1997 and peak at 140,000 tons in '98.
Casting Supply

Based on planned closings of facilities and planned expansions, the
usable metalcasting capacity is estimated at 17.682 million tons.
This is the first increase of capacity since 1981.

Metal Capacity Demand/

Iron 12,665,000 tons 0.80
Steel 1,761,000 tons 0.74
Aluminum 2,114,000 tons 0.77
Copper Base 400,000 tons 0.75
Magnesium 40,000 tons 0.78
Zinc 430,000 tons 0.82
Nonferrous 62,000 tons 0.65
Investment 210,000 tons 0.79

TOTAL 17,682,000 tons 0.79

Pumps & Compressors - Continued growth in highway and building construction should stimulate demand for pumps and compressors. Gray iron castings are expected to improve by 2% in 1997 to 233,000 tons.

Refrigeration & Air Conditioning - The long-term growth of this industry is dependent on housing starts, GDP, automotive sales, commercial construction and exports. A 3% per year growth is forecast. While gray iron is expected to lose some applications to other materials, it is also expected to sustain a growth of 2.4% per year. In the short-term, gray iron shipments are projected to grow 4.5% in 1997 to 140,000 tons.

Household Appliances - Use of gray iron castings in appliances continues to decline as the conversion to plastics accelerates. The forecast for 1997 is for a 1% growth to 88,000 tons.

Ductile Iron

Shipments of ductile iron declined only slightly in 1996 to 3.8 million tons from 4.027 million tons in 1995. Overall, tonnage should increase to 3.9 million tons in 1997 and peak at 4.3 million tons in 1998.

Pressure Pipe - Shipments of ductile iron pipe should reach 1.75 million tons in 1997, representing 45% of the total U.S. ductile iron shipments. Production is expected to peak in 1998 at 1.9 million tons. The 2.5% increase in construction activity will assist in the demand for ductile iron pipe.

Motor Vehicles - Short-term demand for ductile iron castings in light vehicles is bullish, with growth to 1 million tons in 1997 and 12.5% growth in '98 to 1.125 million tons, as auto sales peak.

Valves & Fittings - Despite the continued loss of sales to imports from Asian countries, ductile iron valves are expected to grow in 1997 and peak in '99 at 227,000 tons. Sales of ductile iron castings to the valve industry were expected to reach $229 million in 1996.

Special Industry Machinery - Ductile iron casting use has increased in paper, printing and plastic machinery, and this trend will continue at a 3% per year rate. Tonnage-wise, the consumption of ductile iron is expected to grow to 96,000 tons in 1997.

Farm Equipment - The use of ductile iron in farm machinery is projected to grow at a 2.3% per year rate. Shipments are expected to reach 114,000 tons in 1997.
Geographic Analysis of the Metalcasting Industry

Rated by supply in tons capacity, the following is the forecasted
1997 distribution of the top 10 casting-producing states:

1. Ohio 15%
2. Alabama 12%
3. Wisconsin 11%
4. Indiana 11%
5. Michigan 8%
6. Illinois 7%
7. Pennsylvania 5%
8. Tennessee 4%
9. California 4%
10. Virginia 3%

Construction Machinery & Equipment - Ductile iron shipments to this market are expected to grow to 156,000 tons in 1997, and peak at 175,000 tons in '99. Sales are expected to grow 5.5% per year during the next 10-year period.

Power Transmission - Austempered ductile iron is projected to replace some forged gears and shafts in the future and increase ductile iron use in this market. Demand for 1996 and '97 is estimated at 29,000 tons.

Oil Field Machinery - Ductile iron shipments to oil field equipment manufacturers is expected to grow to 51,000 tons in 1997 and to continue growing at the modest rate in the long-term, based on a low increase in oil rig production.

Malleable Iron

Malleable iron casting shipments were estimated at 226,000 tons for 1996 and are expected to decline to 202,000 tons in '97 as more applications are converted to ductile iron.

Pipe Fittings - Malleable iron is expected to continue to participate and grow with the small fittings market until 1998, when it will begin to decline annually. Present production in the U.S. is estimated at 49,000 tons.

Nearly 28% of all malleable plumbing fittings are made by foreign manufacturers, mainly from Thailand. Several importers have been cited for dumping and tariffs have been levied, thus increasing their sales price in the U.S.

Automotive - The largest tonnage of malleable iron castings in the U.S. continues to be made at the GM plant in Saginaw, Michigan, which produces connecting rods. Projections call for malleable iron shipments for automotive use to decline to 130,000 tons in 1997.

Steel Castings

In the short-term, steel casting shipments are expected to increase 1.8% in 1997 to 1.289 million tons and peak at near 1.32 million tons in 1998 and '99. Following is the breakdown of the short-term forecast for steel castings tonnage.
Steel Type 1997 1998

Alloy 1,130,000 1,148,000

Resistant 67,000 76,000

Heat Resistant 29,000 33,000

Steel 30,000 35,000

Other Steel 33,000 34,000

Carbon & Low Alloy Steels

Shipments of carbon and low alloy steel castings are expected to grow to 1.13 million tons in 1997.

Railroad - Spurred by gains in the transport of grain, fertilizers, chemicals, coal and plastics, the demand for freight cars has increased dramatically. After 10 down years, car production jumped into the range of 40,000 to 60,000 per year, and is expected to stay at these levels for the next few years. Shipments of carbon and low alloy steel castings have increased from 400,000 tons in 1992 to more than 700,000 tons in 1995.

Construction Machinery - The construction industry continues to be the second largest market for steel castings, comprising 13% of total shipments. Shipments should grow to 149,000 tons in 1997 and continue to grow to 155,000 tons in '98.

Mining - Consumption of carbon and low alloy steels in ore dressing and coal preparation, crushing and pulverizing equipment increased during the last three years and is forecast to grow at a 2.7% annual rate. It is expected that 79,000 tons will be shipped for mining machinery use in 1997. Short-term growth to 84,000 tons is expected for 1998 and '99.

Valves and Pumps - Shipments of carbon and low alloy steel valves are expected to grow from 65,000 tons in 1996 to 67,000 tons in '97.

Steel castings for the pump market, which parallels growth in oil drilling and refinery installations, is projected to grow at a 2.8% rate annually.

Truck - The continued conversion of parts to ductile iron has caused an expected 1.7% decline in the use of steel castings in tracks.

In the short-term, it is expected that the market will increase to 85,000 tons in 1997 and grow to 88,000 tons in '98.

Corrosion-Resistant Steels

The growth of stainless steel castings continues to be the shining light in the steel casting industry. Shipments reached 72,000 tons in 1995 and are expected to grow to 78,000 tons in '99.

The valve and pump market sectors continue to be the leading growth markets for corrosion-resistant steels, paralleling the growth of the petrochemical and chemical industries. Environmental cleanup projects have also spurred the increased use of cast stainless steel in valve and pump equipment. Use of stainless steel castings in food product machinery is also expanding.

An increase in the production of oil drilling equipment will also aid in the growth of corrosion-resistant steel and high nickel-base alloy castings.

Heat-Resistant Steels

Heat-resistant steel castings are forecast to grow at a rate of 2.5% per year, stimulated by the necessary use in heat treat furnaces. The continued growth in automobile production is a driving force in the increasing use of heat treating. A forecast for 29,000 tons for 1997 will be followed by a 33,000 ton year in 1998.

Manganese Steel

The resurgence of railroad traffic and track repair has stimulated new growth in manganese steel castings. Manganese steel use should grow at a rate of 3.2% per year.


Aluminum Castings

As shown above, the growth trend for aluminum castings in the U.S. is outstanding. The major driving force in the growing use of aluminum castings is the specified fuel consumption required of the automotive industry, necessitating lighter weight cars.

Aluminum casting shipments are forecast to increase at a 4% per year rate, from 1.5 million tons in 1996. Short-term growth to 1.6 million tons in 1997 and 1.8 million tons in '98 is projected.

Total sales of aluminum castings are expected to reach $6.5 billion in 1997.

Aluminum Die Castings - Aluminum die castings are expected to increase 5.8% in 1997 to 963,000 tons and to $3.37 billion in sales. The motor vehicle industry continues to consume more than 52% of U.S. diecasting production (505,000 tons) in 1997.

Aluminum Permanent Mold & Sand Castings - In the long-term, permanent mold and sand cast aluminum is expected to demonstrate an outstanding growth trend, stimulated by the conversion of the engine block and cylinder head to aluminum in light vehicles. Shipments are projected to grow to 800,000 tons for the peak automotive year of 1999.

While the motor vehicle industry is expected to consume 62% of these aluminum castings; the increased demand in diesel engines, instruments, hand tools and office machines will also play a significant role in the long-term growth of aluminum castings.

Motor Vehicles - Aluminum castings in motor vehicles have increased at a rapid rate. The average weight of aluminum castings per vehicle is now estimated at 150 lb. This weight is expected to increase to 180 lb per vehicle by 2006.

Aluminum casting shipments for use in motor vehicles are projected to increase from 843,000 tons in 1996 to 896,000 in '97. Permanent mold and sand cast aluminum is expected to reach 494,000 tons in 1999.

Internal Combustion Engines - Aluminum castings in engines are expected to grow 1% in 1997 to 95,000 tons. Die castings for consumption in small gasoline engines for lawn and marine use comprise 67% of the shipments.

Permanent mold castings are primarily used in diesel engines for such parts as flywheel and gear housings. Permanent mold and sand cast aluminum production is forecast at 31,000 tons in 1997.

Refrigeration & Air Conditioning - The use of die castings in this market sector, stimulated by the advancement of the scroll compressor, is expected to grow at an annual rate of 6.2%.

Aircraft - Aluminum casting applications in aircraft will grow to 55,000 tons in 1997, but substitutions of titanium and investment castings could stunt the growth rate of cast aluminum in this industry.

Instruments - Aluminum castings are expected to increase Item 88,000 tons in 1996 to 92,000 tons in '97 in this market sector.

Copper-Base Castings

Brass and bronze castings, overall, are expected to grow 1% in 1997 to 290,000 tons and reach $1.1 billion in sales.

Valves and Fittings - Industrial valves and fittings, spurred by increased commercial growth, are expected to reach 98,000 tons in 1997.

Plastic substitution has eroded the plumbing fitting market, causing a decline in the overall use of brass and bronze castings. Rigid environmental regulations have also tended to reduce copper-base applications.

Zinc Die Castings

Zinc die castings are expected to decline from their 1996 level of 140,000 tons as the automotive industry's conversion to light metals and plastics continues. Standard-sized automobiles normally carry 50-60 lb of zinc castings. This weight has already been reduced to 25 lb. A further reduction to 17 lb per car is expected.

Magnesium Castings

Magnesium die and sand castings are forecast to increase from 29,000 tons in 1996 to 31,000 tons in 1997. Sales in '97 are expected to reach $171 million.

Use of magnesium die castings in motor vehicles is projected at 12,000 tons in 1997 while consumption per vehicle is expected to reach 4 lb by 2006. Significant applications also exist in chain saws, fishing rods and power tools.

Investment Castings

The 1997 forecast calls for shipments of investment castings to come in around 147,000 tons, with 49,000 tons going into commercial valves. Other major applications include parks for guns, pumps, golf clubs, turbine blades and office equipment.


According to the latest statistics available (July 1996) from the U.S. Dept. of the Interior - U.S. Geological Survey, the consumption of iron, and steel scrap on a daily average basis in July 1996 fell 8% compared with that in June 1996.

On a daily average basis, pig iron production fell slightly and consumption fell 4% from that in June 1996. Stocks of pig iron at months's end dropped somewhat when compared with those at the end of June '96.

Exports of the ferrous scrap in June '96 rose 4% when compared with May 1996. South Korea was the principal country of destination, accounting for 39% of the total exports in June, followed by Canada with 16% and Mexico with 10%.

According to the American Iron and Steel Institute, raw steel capability utilization in July was 87%, down from that in June and unchanged from July 1995.
COPYRIGHT 1997 American Foundry Society, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1997, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
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Author:Kirgin, Kenneth H.
Publication:Modern Casting
Article Type:Industry Overview
Date:Jan 1, 1997
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