The global metal casting industry is expected to reach 105 million metric tons by production over the period 2014-15. The industry has been completely driven by the recovery of end use industries such as automotive, which contributes 40% of global castings consumption.
With the initial post of our series on how Mexico is outpacing China for US castings demand, we first dig into how auto sales in the United States continue to gain ground.
US Automotive Sales Trends
The US automotive industry is expected to have a CAGR of 2.3% over the period between 2013-17. Considering US light vehicle sales, the industry rode highest in the year 2000 when they exceeded 17 million. They hovered at about 16 million through 2007 and then crashed to below 10 million in 2009. Since then, sales have recovered steadily.
The outlook for the period 2014-15 calls for a close percentage point improvement in the growth rate of each year. Consumer spending growth has remained remarkably stable because of surprisingly robust employment growth in a sluggish economy. The US government had spent US$80 billion on the automotive industry bailout.
However, it has recovered about $55 billion as of the end of October 2013. Strong consumer demand in Q3 2013 is the culmination of another strong year ahead for the automotive industry. Vehicle production in North America is back near record levels, with output expected to surpass 16 million units this year for the first time in more than a decade.
Despite many plant shutdowns due to the recession, US automakers are now running many plants around the clock to keep up with rising demand, yet proceeding cautiously to ensure they don’t get ahead of the market.
When considering vehicle production in North America, it is expected to reach 17 million units by 2015 and 18 million units by 2018. Revived customer spending, especially with improvements in credit availability, shift to green vehicles, and aging vehicle fleets are all predicted to drive auto sector growth in years to come.
US Castings Demand to Grow
Castings demand in the US is greatly driven by the transportation sector, oil and gas, machine tool, valve and automotive markets. Construction equipment production is expected to decline in North America for years to come. As gas prices continue to rise, automotive manufacturers are giving end consumers more fuel-efficient choices, which increase the consumption of nonferrous castings.
Ductile iron, steel, aluminum, magnesium and copper-based alloy castings have the greatest opportunities for long-term growth. However, steel castings growth is expected to be led by the oil and gas, valve, pump and machine tool and mining markets.
Both aluminum and magnesium-based castings are expected to attribute long-term growth to the return of automotive and transportation markets in North America. Considering the ferrous castings market, US imports represent 13.2% of global imports; it ranks No. 1 in that category. Below are the anticipated growth rates for several specific metal types of castings:
Next Up: An update on why China is losing its cost advantage in castings.
MetalMiner welcomes guest contributor Suriya Anjumohan, senior research analyst with Beroe Inc., specializing in metal castings, forgings & stampings. Beroe is the premier global provider of customized procurement services specializing in sourcing, supply chain visibility, financial risk analysis and environmental impact to Fortune 500 organizations. With nearly 400 dedicated procurement specialists in 38 domains, across 9 industries, Beroe proactively invests in knowledge assets to build valuable, real-time procurement insight.