The industry declined in recent years, as it is tied to industrial activity, which was devastated by the global economic crisis.
New York, NY (PRWEB) January 23, 2015
Following years of revenue declines, the Nonferrous Metal Foundry Products industry has grown significantly over the past five years, despite drops in nonferrous metal prices and export sales. Companies in this industry melt nonferrous metals, primarily aluminum and copper, and pour the molten metal into a mould of a desired shape. “When the metal solidifies, it forms a casting in the same shape as the mould,” according to IBISWorld Industry Analyst Leah Goddard. These castings are then used in the production processes of downstream customers, such as manufacturers of motor vehicles, machinery and aircraft.
Since nonferrous metals comprise the industry's most significant input and output, foundries are vulnerable to fluctuations in the prices of these metals, which are tied to trends in industrial activity. As industrial activity recovered, led by emerging markets like China, prices of nonferrous metals and other commodities surged. This trend rapidly reversed as persisting debt issues in developed economies and slowing growth in emerging markets led prices to deteriorate once more from 2012 to 2014.
The slowdown in demand from downstream markets, coupled with declining prices for nonferrous metals, has reduced industry growth in recent years. “Due to difficult operating conditions, unprofitable companies have left the industry or been absorbed by larger operators,” says Goddard. Nevertheless, industry revenue is forecast to rise 6.5% in 2015 as the Canadian dollar depreciates, thus boosting industry exports, and aluminum prices recover, putting upward pressure on selling prices. Overall, industry revenue is estimated to increase at an annualized rate of 12.7% to $1.8 billion over the five years to 2015.
Over the five years to 2020, the industry will benefit from rising manufacturing activity, which will support higher prices for nonferrous metals and, therefore, industry castings. Growing demand for nonferrous metal castings worldwide will bolster revenue from industry exports. While imports of low-value, high-volume castings will continue to pose a threat, domestic foundries will work closely with customers to develop specialized castings, which will provide a buffer from lower-priced imports. Despite this growth, the number of companies will continue to decline as larger operators expand their market share.
For more information, visit IBISWorld’s Nonferrous Metal Foundry Products Manufacturing in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry primarily melts and pours nonferrous metals into molds of a desired shape to make castings. The castings are made from purchased metals or in integrated secondary smelting and casting facilities. The main nonferrous metals the industry uses are aluminum, copper, magnesium, nickel and titanium.
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