Despite the ups and downs in input prices during the past five years, many operators have been able to keep their margins above the zero mark.
Melbourne, Australia (PRWEB) August 24, 2013
After a period of heavy beatings, the Iron and Steel Forging in Australia industry is expected to emerge with a stronger and brighter outlook. Over the five years through 2013-14, industry revenue is estimated to decline at an annual compound rate of 2.3% to reach $857.4 million. Despite this, profit margins have been relatively healthy, which is mainly attributed to the ability of operators to pass on prices to their clients. According to IBISWorld industry analyst Andrei Ivanov, “Despite the ups and downs in input prices during the past five years, many operators have been able to keep their margins above the zero mark.”
A producer of primarily intermediate products, the industry is at the mercy of the performance of its downstream buyers. A poor economic climate in the past five years has exposed many downstream industries to weak demand conditions, which eroded demand for products from the forging sector. An especially feeble performance from automotive industries is the main reason for the demise of many operators in the past five years. “Several players exited the industry after failing to fill up their order books, while others consolidated to brave a difficult period of soft demand and volatile input prices,” says Ivanov. In 2013-14, industry revenue is expected to contract by 0.7%. The industry has a relatively low level of concentration. Although many large players are involved, their industry-related operations are generally small. The most significant player is Arrium Limited.
The next five years is expected to be somewhat brighter for the Iron and Steel Forging industry. Construction activities are expected to increase, generating demand for various equipment and machinery that require forged metals for production. Growth in several niche markets such as boatbuilding and shipbuilding will also offer some relief to foundries struggling to buttress their bottom line. However, this may be offset by a further decline of the automotive industry and the future closure of Ford Australia. Decreasing amounts of investment into mining also pose a threat to industry growth, as more and more projects reach capacity.
For more information, visit IBISWorld’s Iron and Steel Forging in Australia industry report page.
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IBISWorld industry Report Key Topics
Operators in this industry are mainly engaged in iron and steel forging activities. These activities involve the shaping of iron and steel into different forms. The process alters the physical properties of the metals, resulting in improved strength characteristics.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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