Forgings Market Strong, Castings Weak

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Macroeconomics

US manufacturing is doing badly when you look at automotive and construction. One would expect the spill-over into other sectors to have had a severely negative impact. But, after a few months of dire warnings of recession, the Chicago PMI Index popped back up above 50 supporting a widespread belief that US manufacturing is continuing to confound the doomsayers in spite of the problems in certain sectors. But it is the problems in those certain sectors that are affecting the forgings and castings markets.

Though average lead-times have remained at 10 weeks, a sure sign that demand is holding up well, closer examination shows that certain areas within the metal parts market are doing better than others. Forgings had a record year in 2007 with demand up 10% over the prior year according to Purchasing.com. Commercial aviation, aerospace, military ordnance, railway equipment, oilfield machinery and power generation have all seen robust activity. Each are big consumers of forgings. But castings have declined in the automotive, garden machinery and marine markets.  Demand has declined for both captive cast houses and among casters serving the residential housing and construction markets. The different focus of forgings and castings explains why the two methods of metal forming are going in different directions.

As with all metals, raw material cost increases have caused finished component prices to rise rapidly this year and consumers of finished parts have been searching for means to control costs. We have written before on strategies to address such cost increases here,  here and here. And with most metal costs appearing to plateau after rises last year, now might be a good time to be reviewing both cast and forged parts.

–Stuart Burns

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