Industry Update: Foundry and Steel
The global foundry and steel industry is massive, 112.7m tons of metal castings are produced globally every year. In Europe alone, 290,000 are employed in the foundry industry.
As has been the case in many other industries, foundry and steel has experienced the impact of COVID-19 on production, supply chains and consumer demand. With foundry being one of the sectors we work with most frequently, we wanted to examine the current climate in the industry and the outlook for the coming months.
Industry overview
According to a recent survey by the CAEF – The European Foundry Association – foundry production in the first half of 2020 decreased by around 32% compared to 2019. There was an average drop in orders across Europe of 39%, and as a result the industry was utilising 67% of its capacity. For the whole of 2020, a general decline of production of around 25% is expected.
Taking a global outlook, the World Foundry Organisation (WFO) recently conducted a survey in 10 major markets – including China, USA, Germany, Japan and other Asian and European countries. On average, they reported a reduction in workforce of around 20%, due to both social distancing rules and a reduction in demand.
One of the most pressing concerns is the inability to travel, both within borders and internationally. Travel restrictions have meant that foundries have been unable to visit their customers and offer hands-on support, which many feel has affected and will continue to affect growth.
The wider markets
Obviously, the foundry industry is a vital part of the supply chain in many other industries that rely on and use cast metals. As a result, demand for products and projects in those sectors dictates demand in the foundry industry.
The automotive industry
In many global economies, the foundry industry is effectively embedded into the automotive industry. Therefore, fluctuations in the demand for and the production of vehicles has a noticeable impact on the foundry industry.
According to the WFO’s survey, foundries supplying the automotive sector have seen a reduction of up to 50% since the closing down of major car makers. This is not surprising when you consider that there is set to be a dramatic decrease in the number of automobiles sold in 2020 – a drop of 20% compared to last year.
The construction industry
Similarly, the global construction industry is a massive influence on the foundry industry as a user of steel. In Q1 of 2020, forecasted growth in the construction industry was downgraded from 3.1% to 0.5% by GlobalData. There does remain opportunity in emerging markets, but advanced markets are suffering.
A further survey by GlobalData in towards the end of Q2 in May found 88% of respondents had seen a delay in construction projects as a result of COVID-19. The forecast was further downgraded to a decrease in 3.2% for the construction industry in 2020, and it was noted that a steeper downturn is being prevented by the quick recovery of the industry in China.
Elmelin have been working with the foundry and steel industry for decades, and are here to support foundries as they rebuild and recover in the “next normal”. Our range of mica-based insulation solutions can help to improve foundry safety and efficiency. If you’d like to find out more, get in touch.