Downloadable PDF

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

Economies worldwide are struggling with recession, and the global metalcasting industry is feeling the ripple effects. The recent World Census of Casting Production conducted by MODERN CASTING in December 2008 revealed global casting shipments were 95 million tons for 2007. Metal casting shipments are expected to drop to 90 million tons by 2010.

Sixty-two percent of metal casting shipments in the world are made in China, Western Europe and the U.S. China’s expected casting industry growth of 2.5% to 2010 tops the estimated growth of all other countries and regions. Worldwide, a shortage of scrap and pig iron continues to raise costs, resulting in metalcasting facility closings. Casting capacity is predicted to be reduced by 1 million tons in five years. Meanwhile, annual tons shipped per casting facility will increase from 2,100 tons per year to 2,500 tons. Aluminum casting and ductile iron casting shipments are forecast to grow to 13 million tons and 23 million tons. 

An analysis of the production of gray iron, ductile iron and aluminum castings in major industrial regions has been performed to determine their effect on the world casting market place.

Western Europe

The forecast of casting markets in Europe is based on past and present automotive markets and discussions with key individuals in the automotive industry. Table 1 summarizes the forecast of car and truck production based on these interviews (download pdf to view tables).

Passenger car production in Western Europe is expected to decrease at a rate of 4.7% per year from 14,458,000 vehicles produced in 2007 to 12,517,000 vehicles in 2010.

Light truck production is expected to rise to 17% of total light vehicles and reach 3.1 million vehicles by 2009.  The “light truck” classification is included not only in the “commercial vehicle” group but also the “passenger car” classification.

As shown in Table 1, Germany, France and Spain continue to lead in motor vehicle production. Italy is expected to rebound from recent lows and reach 1 million vehicles in 2010.

Despite the forecasted growth in motor vehicle production, gray iron consumption in motor vehicles is forecast to decline at a rate of 4.7% annually from 2.2 million tons in 2002 to 1.5 million in 2010 as parts continue to be converted from iron to aluminum and plastics. Aluminum now makes up more than 97% of cylinder head production and more than 70% of engine blocks, with an expected growth to 90% by 2010.

Ductile iron is forecast to decline 5.8% per year based, in part, on some conversions of suspension castings to aluminum. The motor vehicle sector consumes a large amount of ductile iron in exhaust manifolds, calipers, knuckles, differential carriers and cases, wheel supports, yokes, anchors, gears, plates, brackets, couplings, shafts, truck beams, sprockets, steering gear housings, control arms and others.

Aluminum automotive castings, at 2.7 million tons produced  in Western Europe, now make up approximately 70% of the total aluminum castings shipped, but a decrease to 2.3 million tons is expected in 2010.

In other end-use markets, a slight decrease from 776,000 tons in 2006 to 589,000 tons in 2008 is forecast for municipal and building construction in Western Europe, based on the expected decrease in housing starts. A continued loss to imports from Eastern Europe is probable, along with gray iron conversions to ductile iron. Ductile iron usage is now estimated to be more than 20% in Western Europe.

The production of ductile iron pressure pipe was 1,611,000 tons in 2006 and is forecast to decrease to 1,465,000 tons by 2008 with losses to PVC pipe and a reduction of exports due to currency problems.

Western European gray iron shipments in machine tool and plant engineering are forecast to decline from 1,300,000 tons in 2006 to 1,090,000 tons in 2010. The annual four-year rate of decline is 4.3%.
Finally, in 2008, 530,000 tons of ductile iron were consumed in construction machinery. Ductile iron usage is forecast to decline in the short-term to 415,000 tons in 2010.

GERMANY

The shipment of castings by German metalcasting facilities primarily depends on the country’s domestic automotive industry, coupled with exports. German vehicle production reached 5.82 million units in 2006 but is expected to have declined to 5 million units in 2008.

The weight of iron castings per vehicle is expected to drop. This factor, combined with lower exports, is expected to lower the shipments of both gray and ductile iron (Table 2). Aluminum casting shipments are forecast to decrease with auto production, dropping to 668,000 tons in 2009—a loss of 200,000 tons since 2007.

The high cost of metal scrap and pig iron and the strong Euro continue to reduce profit margins for metalcasters, causing some reduction in the number of casting facilities.

UNITED KINGDOM

As the U.K. economy recessed in 2007, exports also dropped off, reducing gray and ductile iron shipments to their lowest levels in 20 years. 

Vehicle production in the country is expected to drop to 1.28 million units in 2010, and the demand for iron castings is expected to remain low compared to 1998 and 1999 levels (Table 2). Aluminum casting shipments also are expected to reach new lows in 2009 and 2010.

The currency exchange rate remains relatively stable against the Euro, thus keeping U.K. metalcasters competitive in the Western European marketplace. The strength of the pound against the dollar has curbed exports to the U.S.

ITALY

Italy’s economy has slowed in the past eight years and is not expected to rise significantly in the short term. Growth of the GDP is forecast to drop to 1%.

The metalcasting industry has suffered in the past 20 years, and the number of casting facilities has dropped from 700 to 280. Gray iron casting shipments declined to 931,000 tons in 2006 and are expected to drop further in 2010 to 692,000 tons. A continued decline is expected in the next few years. Ductile iron tonnage is expected to fall from 549,000 tons in 2006 to 430,000 tons in 2010.

Italy has developed a cluster of automotive component casting suppliers. Fiat Teksid has become one of the best world-class producers of automotive aluminum castings of all types, with high productivity and quality of product. The automotive sector is sheltered and primarily supplied by Italian-made castings. The continued strength of the Euro, however, is expected to keep domestic metalcasters non-competitive in the export picture.

Aluminum casting shipments are forecast to drop to 730,000 tons in 2010 from 900,000 tons in 2007. Ductile iron is to grow at an annual rate of 1.4% as the automotive industry recovers. 

FRANCE

After growing strongly in 2004, the French economy began slowing in early 2005 and is forecast to continue to slow through 2010.

Gray iron casting shipments are forecast to decline from 441,000 tons in 2006 to 340,000 tons in 2010. Ductile iron shipments, led by the dominant Pont-a-Mousson in the pipe market, are forecast to decrease from 623,000 tons to 488,000 tons in 2010.

Aluminum casting shipments are expected to drop to 254,000 tons in 2010 from 291,000 in 2006. Die castings make up 60% of this tonnage.

SPAIN

Spain’s GDP growth, one of the highest in Europe, is expected to drop to 2.2% in 2009.

The Spanish automotive industry, which is the biggest user of domestic-made castings, is forecast to decline. Total vehicle production is forecast to decrease from 2.7 million units of peak production in 2007 to 2.4 million units in 2010. Gray iron casting shipments are forecast to decline 2% per year as conversion to aluminum continues. Ductile iron is expected to decline from 623,000 tons in 2006 to 488,000 in 2010, and aluminum castings are forecast to decline from 130,000 tons in 2006 to 114,000 tons.

Spain continues to be the largest casting export nation in the European Union with a 160% ratio of shipments to demand.

Eastern Europe

POLAND

Gray iron shipments from Polish metalcasting facilities are forecast to decline from 389,000 tons in 2002 to 360,000 tons in 2010. Ductile iron shipments are expected to drop from 102,000 tons to 100,000 tons in 2010 (Table 3). The biggest market for gray iron is in machinery and municipal casting applications, and ductile iron primarily is used for automotive parts. Ductile iron municipal and construction casting applications continue to grow. Approximately 40% of the production of iron castings is exported.

CZECH REPUBLIC

Czech Republic metalcasters are exporting more than 50% of their iron castings and more than 60% of their aluminum. Gray iron casting shipments are forecast to decline from 247,000 tons in 2002 to 230,000 tons in 2010. Ductile iron shipments are expected to decrease to 35,000 tons in 2010.

HUNGARY    

Aluminum casting production has greatly increased in the last five years in Hungary, while gray and ductile iron shipments have declined and are expected not to grow appreciably in the next few years. Gray iron is forecast to grow from 30,000 tons to 40,000 tons, while ductile iron increases to 30,000 tons primarily for sanitary, municipal and construction uses. One major metalcasting company is expected to produce larger quantities of ductile iron on high production molding equipment.

ROMANIA  

Though the market for steel castings has markedly decreased in the past few years, the iron casting industry has rebounded and is expected to be strong in the future.  Automotive and pipe applications are expected to bring ductile iron shipments up to 20,000 tons.

Russia

Total casting output in Russia has fallen from 13 million tons to near 8 million tons, and gray iron shipments are expected to drop to 2.8 million tons, while ductile iron and aluminum also drop (Table 4).

Asia

Asia remains a high growth region in economic terms, with positive demand prospects for casting usage in automotive applications. In China and India, the focus is on small, low-cost cars that satisfy a growing market of new car owners. Car production in India could more than double to half a million units or more in the next five years. New vehicle production in China increased to 8 million units in 2008 and is expected to rise in the future. Korea continues to add capacity and will grow in the export market.

JAPAN

Gray iron casting shipments are forecast to decrease from 2,834,000 tons in 2006 to 2,700,000 tons in 2009 (Table 5). Ductile iron shipments are forecast to drop from 2 million tons to 1.9 million tons, spurred by a large increase in pipe and automotive usage.

Aluminum casting consumption is forecast to continue to rise, with die casting production growing from 995,000 tons in 2005 to 1 million tons in 2009 and permanent mold and sand casting production rising from 490,000 tons to 520,000 tons due to increases in automotive applications (Table 6).

CHINA

Casting shipments from China are continuing to increase each year (Table 7). Total metal casting shipments in China now are estimated at 32 million tons, which is 36% of the total world tonnage. The following is a summary of the Chinese metalcasting industry:

• Most metalcasters pour multiple alloys;
  
• Quality control is weak but improving;
  
• Environmental protection laws are not completely enforced;
  
• Productivity is relatively poor because of labor intensive cleaning of castings;
  
• Raw materials are plentiful;
  
• Coke is inferior but cheap;
  
• Labor wages range from $0.50/hour to $1/hour;
  
• Some reports of dumped castings into the U.S. have surfaced;
  
• Exports of castings are forecast at 3.5 million tons in 2009;
  
• Exports of castings to the U.S. are estimated at 25% of the total cast imports to the U.S.

KOREA

Gray iron, ductile iron and aluminum casting shipments hit new peak levels in Korea in 2008 but are expected to drop in 2009 and 2010 (Table 8). 

Korea is estimated to export approximately 200,000 tons of castings to the U.S. per year.

INDIA

Exports from Indian metalcasting facilities to the U.S. are estimated at 300,000 tons, with the great majority in iron municipal castings. Anti-dumping tariffs have been imposed on Indian casting shipments. Table 9 indicates the continuing growth of casting shipments from India.

Brazil

Brazil has about 1,000 casting facilities employing 60,000 workers. Casting capacity is about 2.2 to 2.5 million tons (Table 10). Nearly 50% of gray iron and ductile iron castings are automotive, and nearly 70% of aluminum castings are automotive. Captive auto casting suppliers in Brazil include those supplying Ford, GM and Fiat.

According to industry interviews, many Brazilian casting facilities lose money. Casting plants are used to being subsidized, and owners have been known to use tax evasion to avoid closing.

Brazilian casting imports to the U.S. are forecast at 250,000.

North America

MEXICO

Casting imports to the U.S. are estimated to be more than 300,000 tons. Low prices for gray iron diesel engine blocks could be in the dumping category.

Shipments of ductile iron castings are expected to grow, spurred by new high production facilities, and aluminum castings are forecast to reach 700,000 tons in 2010 (Table 11).

CANADA

Canada’s GDP growth exceeded 3% in 2006 but is expected to slow to below 2.7% by 2009.
The currency exchange rate is expected to approach  1 CAN$/US$ in 2009, and casting imports to the U.S. are forecast to be near 350,000 tons.

Aluminum casting production, which was forecast to rise to 350,000 tons by 2008, shows a predicted decline to 280,000 tons by 2010 (Table 12). MC

A 50-year metalcasting veteran, Ken Kirgin founded Stratecasts Inc., Ft. Myers, Fla., in the early 1980s to provide domestic and international forecasting and trends analysis and strategic planning.