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By Ken Kirgin, Stratecasts Inc., Ft. Myers, Florida

Recent interviews with casting users indicate that most market sectors are experiencing losses in shipments in the first quarter of 2009 as the domino effect of poor sales has affected markets beyond automotive and housing starts. These losses indicate that the metalcasting industry will struggle to rebound in the next three quarters to match 2008’s tonnage and sales.

The production of light vehicles fell close to 30% in the first quarter of 2009. Medium to heavy truck and trailer production is expected to fall to about 190,000 units after dropping in 2008, and orders for railroad freight cars in 2009 are expected to fall to 40,000.

Based on these and other first quarter statistics, total metal casting shipments are reforecast to decrease 2,300,000 in 2009 versus 2008.

The following sections provide updated information on each of the major cast metal groups, as well as a forecast of final shipments for 2008 and revisions to the original forecasts for 2009.

Gray Iron

Gray iron shipments are forecast to drop in 2009 to 3,357,000 tons (Table 1). Compacted graphite iron castings continue to grow in the diesel engine and motor vehicle engine market sectors. Shipments of 120,000 tons are forecast for 2009.

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 185 lbs. in 2009. The usage of iron in engine blocks is forecast to drop to 35% in 2009 while usage of iron heads in light vehicles decreases to 2%. However, in 2009, 56% of light vehicles are forecast to be classified as light trucks, which have been slower to convert their blocks from iron to aluminum. Transplant production, now approximately 23% of 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 is expected to drop in 2009, along with an increase in the import-to-demand ratio to 0.28.

The loss of medium to heavy truck production in the first quarter is expected to continue throughout the year and decrease gray iron shipments to this market sector by 20% in 2009.

Internal Combustion Engines—The predicted decrease in truck production in 2009 is expected to result in a decrease in iron casting shipments for diesel engine manufacturers; however, imports of iron castings have risen to 50% of demand, causing additional lower shipment predictions and an increase in plant closings in this market sector.

A revised forecast of 304,000 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 manufacturing sector has moved offshore, reducing forecast shipments of gray iron castings to 40,000 tons for machine tools and 83,000 tons for all metalworking machinery in 2009. 

Valves & Fittings—The import-to-demand ratio now has risen to an estimated 0.4 for gray iron valve and fitting parts. Shipments of 186,000 tons are forecast for 2009.

Pumps & Compressors—A drop in oilfield equipment, construction and general industrial usage is expected to result in a decrease of gray iron casting consumption in 2009.

Ductile Iron

Total shipments of ductile iron castings are expected to decrease 18% in 2009 to 3,262,000 tons (Table 2).

Pressure Pipe—Based on a poor year in housing starts and commercial construction, along with a decrease in exports, shipments of ductile iron pipe are expected to decrease to 1,580,000 tons in 2009.

Motor Vehicles—The average weight of ductile iron castings per light vehicle is expected to drop to 175 lbs., as conversion of suspension castings to aluminum increases.  A continued drop in light truck production should continue the decrease in ductile iron shipments in 2009 to 525,000 tons. Ductile iron usage in suspension castings is expected to drop to 15% of the light vehicles in 2009. Aluminum is also forecast to replace ductile iron in many differential carrier applications.

An expected increase in the import-to-demand ratio to 0.2 is expected to keep shipments down in the future even with an increase in demand if light vehicle production rises.

Austempered ductile iron applications continue to grow as they replace forgings. Ductile iron casting shipments for the medium-to-heavy truck market sector are expected to drop to 142,000 tons in 2009, a 19% decrease versus 2008.

Special Industry Machinery—The purchase of printing, plastic, paper and textile machinery is expected to drop in 2009. Ductile iron shipments are forecast to decrease to 87,000 tons in 2009. A 4% annual growth rate of ductile iron shipments from the final low point is forecast by 2017.

Farm Machinery & Equipment—Based on the forecast of a drop in farm machinery production and some conversion of new applications to ductile iron, an 11% decrease in shipments of ductile iron is forecast in 2009.

Steel

Steel casting shipments are forecast to drop to 982,000 tons in 2009, a 25% reduction (Table 3).

Table 3. Forecast Revisions for Steel Casting Shipments (Thousands of Tons)

Railroad—Freight car deliveries are forecast to dip to 40,000 in 2009. Based on this forecast and other forecasts for locomotives and railroad applications, U.S. steel casting shipments for this sector are estimated to be 420,000 tons in 2009. The estimate was made based on a 0.12 import-to-demand ratio and other estimates.

Construction, Mining & Oilfield Equipment—A reduction of 74,000 tons in steel casting shipments was based on a more recent analysis of imports and an increase in the import ratio to 0.15 in these three categories. Shipments are now forecast to be 288,000 tons in 2009.

Corrosion Resistant Steels—Despite the increase in imports of stainless steel valve components to 20% of demand, corrosion resistant steel shipments are expected to decline 86,000 tons/year.

Aluminum

Aluminum die casting shipments in 2009 are forecast to decrease to 879,000 tons (Table 4). The 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.

Table 4. Forecast Revisions for Aluminum Die Casting Shipments (Thousands of Tons)

Aluminum castings made by the permanent mold and sand cast processes are forecast to decrease in 2009 by 20% (Table 5). The accelerated conversion of iron engine blocks and cylinder heads to aluminum has curbed the loss of shipments in these processes, despite the slow vehicle sales.

Table 5. Forecast Revisions for Aluminum Permanent Mold & Sand Casting Shipments
(Thousands of Tons)

Copper-Base

Shipments of copper-base bronze and brass castings are forecast to decline by 21% in 2009 (Table 6).  MC

Table 6. Forecast Revisions for Copper-Base Casting Shipments (Thousands of Tons)

A 50-year industry veteran, Ken Kirgin founded Stratecasts Inc., Ft. Myers, Fla., to provide forecasting and trends analysis and strategic planning.

For More Information: Original 2009 Forecast