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20. April 2008

AFS Reports Declining Rate of Imported Metal Castings; Optimistic Outlook for Growth in the Domestic Market

SCHAUMBURG, Ill. (USA) -- A declining rate of metal casting imports to the U. S. and improved productivity by U.S. metalcasters is improving the outlook for the domestic metalcasting industry, according to the American Foundry Society (AFS) Metalcasting Forecast & Trends 2008 report.

The report indicates that U.S. imports of castings rose 7% in 2007, but imports are forecast to rise only 5% in 2008 to 3.68 million tons. Although China continues to lead the world in casting production (with the U.S. ranked second), the reliance on imported castings is being reduced by a variety of factors, including rising offshore production costs and increased focus by China and India on meeting the needs of their domestic markets.

U.S. sales of metal castings are expected to increase 5.4% to $34 billion in 2008 from $32.4 billion in 2007, with output rising 3.7% to 13.8 million tons in 2008. The AFS report shows a continuing shift in the types of cast materials, with gains forecast for ductile iron, magnesium and aluminum, while steel and gray iron shipments will decline.

"We are beginning to see a shift in U. S. buyers using domestic producers rather than foreign sources. The U.S. is producing more castings today than in 1991 despite a decrease in the number of plants," said Alfred Spada, AFS director of marketing, communications and PR. "Over the last 15 years we have seen tremendous growth in domestic production of magnesium and aluminum castings and remarkable improvements in productivity."

There are 2,170 metalcasting plants in the U. S. today, compared with 3,200 facilities in 1991. However, from 1991 to 2007, aluminum casting production grew by 91%, from 1.1 million tons to 2.1 million tons, and magnesium production grew 331%, from 29,000 tons to 125,000 tons.

Much of the growth in domestic aluminum and magnesium castings is being driven by increased use in vehicles, as automakers try to reduce weight to improve fuel economy and overall performance. The use of aluminum castings per vehicle doubled between 1992 and 2007 from 130 pounds to 260 pounds as
the alloy was used more extensively for engine blocks, cylinder heads and suspension components. Magnesium is expected to have even greater growth on a percentage basis over the next 10 years, increasing from 15 pounds per vehicle in 2006 to 45 pounds per vehicle by 2017.

Looking at the world market, Spada explained that a combination of rising wages, productivity problems, labor intensive cleaning operations and a slower conversion to technology are affecting Chinese exports. "For example, China's overall production of castings is about twice the tonnage
of U. S. producers, but they have 10 times as many facilities."

Interviews of casting end-users and econometric forecasts support optimism for gains in many market sectors for the next two years, as well as long-term growth. The AFS report predicts U.S. metal casting sales will grow to $42 billion in 2017.

Nonetheless, the difficulty of matching projections with market realities is illustrated by some key indicators from 2007:

    -- Imports for light vehicles-Forecasted at 21% of demand; actual was 24%
       of demand
    -- Medium to heavy trucks and trailers-Forecasted a 15% reduction (420,000
       trucks/260,000 trailers); actual was a 25% reduction (370,000
       trucks/229,000 trailers)
    -- Ductile iron pipe-Forecasted 2.3 million tons; actual was 2.07 million
       tons

The AFS report has a variety of statistics and data, including forecasts for shipments in 18 end-use industries, U. S. industry demographics, worldwide labor rates and historic trends in metal casting shipments. This annual resource for foundries and suppliers was developed for AFS by Stratecasts, Inc.

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