• According to ABIFA, production should grow from 12% to 15% in 2018, and sales
turnover to overseas should increase from 28% to 30%
• Brazil is able to produce 4 million tons of cast parts yearly; record was set in 2008
when production reached 3.5 million tons of cast parts
• Buyers from Germany, USA, Chile and Mexico have been in São Paulo to meet with
Brazilian Foundries; China also requested price quotations
The current year ended with a production of 2.315 million tons of cast parts and a revenue of US$ 7.5 billion. What was only a forecast made last year is indeed going to come true in 2017. The numbers displayed in São Paulo between September 26th and 29th during the Latin American Foundry Fair (FENAF) and ABIFA Foundry Congress (CONAF), both promoted by the Brazilian Foundry Association (ABIFA), cheer up the business sector and, especially, cause ground for optimism that 2018 will be better than the current season.
According to Afonso Gonzaga, president of ABIFA, the aim is to increase production from 12% to 15% in the next year. “Let’s expand our business internally with the automotive market (responsible for 60% of the production), but also focus on the resumption of agro-industry, mining, medicine (through investment castings prosthesis) and manufacturing of foods and household utensils in which cast parts are present”, he argued. Another goal is to reach the record production of 3.5 million tons of cast parts, set in 2008, for the 2020/2021 biennium. There is now good reason to believe in that. The industry, as statistics point out, continues its growth and external markets perceive Brazil as a potential supplier.
Positive Foreign Interest
The first good sign of foreign interest in Brazilian cast products was the attendance of buyers from the USA, Germany, Chile, and Mexico, who came to look for opportunities together with a group of 20 national foundry companies. The expectation from the business meetings was that business would increase an estimated US$ 20 million within six months to three years. “These buyers do not know the Brazilian products, but they are interested in doing business. Nowadays, they are already buying from Asia and the Middle East but want to diversify their markets and, in this case, Brazil is an important player. Our cast parts have good quality and have the same level of those ones found abroad”, said Wagner Paes, Special Project manager of Apex-Brasil.
In the team of buyers who visited FENAF were also business agent associates from Global Alliance Automotive (GAA), an organization which unites professional consultants around the world, and that makes US$ 2.2 billion per year in several areas; among them casting products. The foreign visitors had a great impression of the Brazilian ability and casting quality, according to Guilherme Bonatto, Associate Director of Belluno LLC, a Brazilian company sited in New Hampshire, USA, which played a central role in the delegation’s arrival to the fair. “The growth of 7% in the sector during the first half of the year, in addition to the macroeconomic conditions that we are facing, point out that Brazil is ready to increase exports. And GAA wants to participate in this process doing business with Brazilians”, he says. However, he states that: “It is necessary to take in consideration that this should not be a short-term movement. Brazilian businessmen need to have the commitment of fulfilling part of its ability to sustain business with foreign clients, regardless the economic turbulence”.
Interest on the other side of the world
In addition to the visit from American, German, Chilean and Mexican buyers, the major global producers of cast parts (45.6 million tons per year), who returned after three years to make price quotations with the Brazilian companies, China also showed an interest. “China has always sold products to Brazil. Now, we are cheered up by the Chinese interest in Brazilian cast products. We have buyers that did not know the potential of the Brazilian cast products. And what leaves us ecstatic is that they are not only interested in the iron production, but also in steel and aluminum”, Gonzaga states.
Especially ABIFA sees the Chinese interest as favorably. “The beginning of price quotation is a new moment in which China sees us. The Chinese foundries are stifled in fulfilling the environmental needs. In parity with government help to reduce our tax load and decreased bureaucracy, we can really favor the industry, and we will be disputing on equal terms with the Chinese in the international scenery in a short period of time. I have always perceived China as a great opportunity and not as a threat, as long as mechanisms are created in order to provide us conditions to compete in the market”, Gonzaga states.
Based on the foreign interest in Brazilian cast parts, ABIFA already estimates a growth in exports in 2018. Today, 20% of what is produced in Brazil is being sold to the external market, mainly the United States (42.5%), as well as countries in South America (19.3%). Next year, Afonso Gonzaga anticipates a market turnover that may reach 28% to 30% of the national production. Of the revenue of US$ 7.5 billion estimated for this year, US$ 1.5 billion, derive from oversea sales.
Brazil conducive to growth
Brazil is able to produce 4 million tons of cast parts yearly. If the estimated production of 2.3 million tons was maintained this year, the country would be ranked within the ten best casting markets in the world, led by China (45.6 million tons) followed by India (10.77 million), United States (10.39 million), Japan (5.4 million), Germany (5.31 million), Russia (4.2 million), Korea (2.62 million), and Mexico (2.56 million).
According to ABIFA, Brazil has 1,167 foundry companies that employs about 50 thousand people. 40% of the companies are working with iron, 21% with aluminum, and 14% with steel casting. Another 25% of the companies work with non-ferrous metals; copper, zinc, and magnesium. Together, they are responsible for generating a revenue around US$ 6.9 billion in 2015, a number that was repeated last year.
2019 Fair should gather the BRICs – During FENAF and CONAF, ABIFA promoted the launch of the 18th edition of both events. The new meeting will be held in the same location, Expo Center Norte, in 2019. CONAF should cover a BRICS meeting that will gather businessmen and buyers from Russia, India, China, and South Africa. In addition, within two years, ABIFA will celebrate its Golden Jubilee.
ABOUT THE BRAZILIAN FOUNDRY ASSOCIATION
Brazilian Foundry Association (ABIFA) has been participating in the market for 48 years and is globally acknowledged by significant actuation in its sector. Headed by Afonso Gonzaga, the entity aggregates the main Brazilian casting companies aiming to stimulate the sustained growth of the sector, producing and participating in the actions needed to become strong and competitive. Besides promoting the technological development of casting companies, ABIFA stimulates debate about political, economical, and social themes for the sector defense and its commercial growth.