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Foundry Corporate News

08. November 2009

Foundry Sector in Brazil

Foundry Sector in Brazil

With a big territorial extension Brazil has natural resources that are beneficial to the foundry activity. We have the main raw materials, supplies and energetic sources that place the Brazilian Foundry Industry among the biggest worldwide casting parts producers.  The sector of production of foundry parts in iron, steel and non-ferrous alloys is a segment of the economy that employs about 60.000 thousand workers, and reports revenues of US$ 5.6 billion a year, formed by about 1.300 companies (2005 base). Most of the companies are small and medium sized, and most are Brazilian-owned.

Brazilian Foundry Industry

The Foundry Sector's main characteristic is the intensive use of labor and the raw materials used, all domestic in origin, which gives the sector independence from foreign markets. It also generates a significant number of direct and indirect jobs in the production chain. Recording growing exports and, basically, no imports, the sector contributes for positive results in the trade balance.  Brazil ranks 7th larger producer of foundry products in the world (2004 base), producing more than countries like Spain, Italy and France, for example. Brazilian natural conditions show that the sector has potential to become one of the world's largest. Investments are needed to improve the Brazilian position in the global ranking and make it a natural exporter of foundry products.

The production of the sector has shown a certain growth in the last 4 years, reaching in 2005 the best result in volume of production of foundry parts. Even so, average growth since year 2000 remains situated in 8,6% a.a.  In 2004, the sector had a production of 2.830 tons, and going into 3.355 tons in 2008. The installed capacity, in its turn, has gone from 2004, reaching 4.350 tons.

The country’s exports in the foundry sector have its focus on NAFTA, with a market share that is equivalent to 59,4%, and Europe performs 22,1% of imports coming from Brazil. Mercosul participation shows 9,5%, while the other continents account for 9% of the  recipient export destinations in the country. According to data collected by ABIFA during the business meeting, Brazil is the 7th largest producer of casting in the world, with average revenues of US$ 2,16 billion and with the creation of over 10 thousand jobs, a highly positive performance for a sector that is not regarded by the Federal Government as strategic or competitive, according to Devanir Brichesi, President of the Association ABIFA.

Out of total production, 53,3% is oriented to the automotive industry, supplying makers of automotive components, auto parts and the assemblers of automobiles, trucks, buses and tractors. The automotive segment shows the potential future of the Brazilian market, enhanced by the new resources being invested. Assemblers from Europe , Asia and the  are carrying out an expansion of their business in the Brazilian territory. Due coming of those enterprises, the nationalization process begins and sometimes our quality level have turned us a world supplier for those companies. Brazil has today the 9 th largest vehicle fleet in the world, around 21.3 million vehicles but still a high ratio of inhabitants per vehicle (8.4 in 2003), leaving Brazil far behind first world countries and even other countries in Latin America.

Brazilian Index of Castings Prices - INPF / 2009

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