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The European
Foundry Association
CAEF
The European Foundry Association
www.caef.euSeptember 2019
- 2 - © CAEF, www.caef.eu
2.2 2.2 2.5 2.9
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Brazil Italy Korea Rep. Mexico Russia Japan Germany USA India China
Mill
. t
Global Foundry Industry 2017 – Ranking
Source: National Associations, modern casting
49,4
- 3 - © CAEF, www.caef.eu
Europe: Iron- and Steel Castings 2018
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5Mill. t
Source: CAEF, *=2016
- 4 - © CAEF, www.caef.eu
Europe: Non-Ferrous Castings 2018
0.0
0.1
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0.4
0.5
0.6
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0.9
1.0
1.1
1.2
1.3Mill. t
Source: CAEF, *=2016
- 5 - © CAEF, www.caef.eu
Economy and Key Indicators - Background for Foundry Business
Question in September: Signals for bottom out?
Bild: Fotolia
- 6 - © CAEF, www.caef.eu
Early Indicator: Manufacturing Purchasing Manager Index (PMI)
• is a measure of the prevailing direction of economic trends in
the manufacturing sector
• it consists of an index that summarises whether market
conditions, as viewed by puchasing managers, are
expanding, staying the same, or contracting
• the purpose of the PMI is to provide monthly information
about current and future business conditions to company
decision makers, analysts and investors
• Therefore, the PMI is earliest available information about the
development of an economy!
- 7 - © CAEF, www.caef.eu
Manufacturing Purchasing Manager Index (PMI) in large regionsJanuary 2017 – August 2019
40
45
50
55
60
65
USA China Euro Area
Ind
ex
43
Source: ISM, Markit, http://de.tradingeconomics.com/
Index above 50 points
= increasing economy
(dominated by industrial production and service)
Expansion treshold
USA: Expansion treshold at 43 points
= dominated by the consumption sector
- 8 - © CAEF, www.caef.eu
Manufacturing Purchasing Manager Index (PMI) in the Euro Area *January 2017 – August 2019
40
45
50
55
60
65
Germany France Italy Spain UK
Ind
ex
Index above 50 points
= increasing economy (dominated by
industrial production and service)* plus UK
Source: Markit, http://de.tradingeconomics.com/
- 9 - © CAEF, www.caef.eu
Manufacturing Purchasing Manager Index (PMI)
versus GDP Euro Area
Source: IHS Markit, Deka Bank 22th August 2019
GDP, yoy, in %
PMI (manufacturing and (!) service sector)
PMI is available two months earlier than GDP
- 10 - © CAEF, www.caef.eu
GDP OECD – second quarter 2019
corresponding to PMI
Source: EU, OECD=Organisation for Economic Co-operation and Development
- 11 - © CAEF, www.caef.eu
Manufacturing Purchasing Manager Index (PMI) Selected Countries January 2017 – August 2019
40
45
50
55
60
65
Turkey India Russia Brazil
Ind
ex
Source: Markit, http://de.tradingeconomics.com/
Index above 50 points
= increasing economy (dominated by
industrial production and service)
- 12 - © CAEF, www.caef.eu
GDP Forecast 2019/2020
Revisions of the World Economic Outlook (WEO)
Source: IMF=International Monetary Fund, Summer Revision 2019, WEO=World Economic Outlook
- 13 - © CAEF, www.caef.eu
Main Customer Industries – current status
Bild: Siemens
- 14 - © CAEF, www.caef.eu
Vehicle industry
Bild: GF
- 15 - © CAEF, www.caef.eu
Passenger cars - Sales 1-7.2019: Europe and USA with minus -
China with significant downturn – Brazil recovery
Picture: FotoliaSource: VDA, 1) National Associations 2) AEB 3) WardsAuto 4) JAMA 5) ANFAVEA 6) SIAM 7) CAAM
- 16 - © CAEF, www.caef.eu
Passenger cars – Sales and Production Forecast 2019
China and Western Europe under pressure
Sales Production
Region 2019 2019
World - 4% - 4%
USA * - 2% - 2%
China - 7% - 7%
Europe - 1% - 1%
new EU members + 3% + 4 %
Germany - 1% - 5%
France - 1% ± 0%
UK - 2% - 12%
Spain - 2% - 3%
Italy - 2% - 15%
Brazil + 10% - 1% (NAFTA)
Russia - 2% +2%
India - 10% - 10%
Turkey - 35% - 10%
Japan ± 0% ± 0%
Pic
ture
: F
oto
lia
Source: VDA, August 2019, USA passenger cars minus 8%, Pickups plus 1%!
- 17 - © CAEF, www.caef.eu
General Engineering
Bild: Metallgießerei Schüle
- 18 - © CAEF, www.caef.eu
World: Purchasing manager index (PMI) vs. Industrial production
Two months of information advantage!
Quelle: cpb, IHS Markit, Macrobond, VDMA
0.0
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1.0
1.5
2.0
2.5
3.0
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50
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2014 2015 2016 2017 2018 2019
ProzentveränderungIndexwerte PMI Verarb. Gewerbe (Linke Skala) Industrieproduktion, G3MD (Rechte Skala)
• The mood among manufacturers
of intermediate products and
capital goods continue to
deteriorate.
• The consumer goods industry is
still in the expansion zone.
PMI is available two months earlier
than industrial production data
Manufacturing PMI (left scale)
Source: cpb, IHS Markit,
Macrobond, VDMA
Industrial Production (right scale)
moving three month averagepercentage changeIndex values
- 19 - © CAEF, www.caef.eu
World: Sales development of the global engineering industry
Forecasts revised down for Germany, USA and Japan
Source: VDMA
Reale Veränderung gegen Vorjahr in Prozent
Quelle: VDMA, Stand: Juli 2019
Durchschnitt Welt 2018: 5 %
Durchschnitt Welt 2019: 1 %
-7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13
Japan
Verein. Königreich
Deutschland
Italien
USA
Belgien
Frankreich
Finnland
Portugal
Spanien
Österreich
Schweiz
Schweden
Niederlande
Dänemark
VR China
Prognose 2019 2018VR China
Danmark
The Netherlands
Sweden
Switzerlands
Austria
Spain
Portugal
Finland
France
Belgium
USA
Italy
Germany
UK
Japan
Forecast 2019 2018
Change in % against previous year
Global Forecast 2019: 1 %
World 2018: 5 %
• The multiple forecast revisions in the
course of the year reflect the
uncertainty caused by the trade
conflicts
= delay of investment decisions
- 20 - © CAEF, www.caef.eu
Short Range Outlook – Steel Industry 2019/2020
Source: Worldsteel, Spring 2019, next forcast October 2019
- 21 - © CAEF, www.caef.eu
Short Range Outlook – Steel Industry
2020 Signals of weakness for China and USMCA (former NAFTA)?
Source: Worldsteel, Spring 2019, next forcast October 2019
- 22 - © CAEF, www.caef.eu
European Foundry Industry
Expectations
Source: Eisenwerk Brühl, Bernd Rosenbaum
- 23 - © CAEF, www.caef.eu
Euro Area Business Climate Indicator (BCI) August 2019
Source: Eurostat, calculation CAEF, Industrial Production June 2019
-4
-3
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-1
0
1
2
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-20
-15
-10
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0
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10
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Mar08
Aug08
Jan09
Jun09
Nov09
Apr10
Sep10
Feb11
Jul11
Dec11
May12
Oct12
Mar13
Aug13
Jan14
Jun14
Nov14
Apr15
Sep15
Feb16
Jul16
Dec16
May17
Oct17
Mar18
Aug18
Jan19
Jun19
Bu
sin
es
s C
lim
ate
Ind
ustr
ial P
rod
ucti
on
Ch
an
ge in
% y
oy
Industrial Production Business Climate
No (!) cycle
Recession
Recovery
BCI = early indicator published by the European Commission
• evaluates development conditions of the manufacturing sector in the euro area every month
Snapshot August: The BCI for the euro area increased markedly.
Managers´ production expectations, their views on overall order books and the level of stocks of finished
products improved markedly.
Downturn
due to rising
uncertainties
- 24 - © CAEF, www.caef.eu
European Foundry Industry Sentiment Indicator (FISI)
• is the earliest available composite indicator providing
information on the European foundry industry performance
• collected and published by CAEF every month
• based on survey responses of the European foundry industry
• CAEF members are asked to give their assessment of the
current business situation and their expectaions for the next
six months
• Available at www.caef.eu on a monthly basis!
- 25 - © CAEF, www.caef.eu
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160Ja
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Ja
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Jul-12
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BC
I
FIS
I
FISI BCI
European Foundry Industry Sentiment Indicator (FISI)
and Business Climate Indicator Euro Area (BCI)
Source:
FISI: CAEF, Index 2015=100, country weight based on production 2017
BCI: Eurostat, calculation CAEF
FISI and BCI nearly in line!
In the majority foundry business in Europe is focused
on the customers in Europe
= Castings were produced where castings are needed
Exception: Special unique selling points!
- 26 - © CAEF, www.caef.eu
FISI – European Foundry Industry Sentiment Indicator August 2019
Ferrous Castings
80
90
100
110
120
130
140
150
160
170
180
Jan
-08
Jul-0
8
Jan
-09
Jul-0
9
Jan
-10
Jul-1
0
Jan
-11
Jul-1
1
Jan
-12
Jul-1
2
Jan
-13
Jul-1
3
Jan
-14
Jul-1
4
Jan
-15
Jul-1
5
Jan
-16
Jul-1
6
Jan
-17
Jul-1
7
Jan
-18
Jul-1
8
Jan
-19
Jul-1
9
current situation expectations for six months
• The indices of the current situation and the business outlook recorded falls
• This decline was driven primarily by the engineering sector and the US/China
trade conflict, which is affecting the main customer industries
Source CAEF, Index 2010 = 100, country weight based on production 2017
- 27 - © CAEF, www.caef.eu
80
90
100
110
120
130
140
150
160
170
180
Jan
-08
Jul-0
8
Jan
-09
Jul-0
9
Jan
-10
Jul-1
0
Jan
-11
Jul-1
1
Jan
-12
Jul-1
2
Jan
-13
Jul-1
3
Jan
-14
Jul-1
4
Jan
-15
Jul-1
5
Jan
-16
Jul-1
6
Jan
-17
Jul-1
7
Jan
-18
Jul-1
8
Jan
-19
Jul-1
9
current situation expectations for six months
Source CAEF, Index 2010 = 100, country weight based on production 2017
• Foundries were again less satisfied with their current business situation
• Pessimism regarding the coming months also increased
• But both indexes are still on an acceptable level
FISI – European Foundry Industry Sentiment Indicator August 2019
Non-Ferrous Castings
- 28 - © CAEF, www.caef.eu
80
85
90
95
100
105
110
Jan
-13
Jul-1
3
Jan
-14
Jul-1
4
Jan
-15
Jul-1
5
Jan
-16
Jul-1
6
Jan
-17
Jul-1
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Jan
-18
Jul-1
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Jan
-19
Jul-1
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current situation expectations for six months
• A lot of weak flashs in the pan but no straight development!
• Expectations cooled down as a result of global uncertainty and economic slowdown
Source CAEF, Index 2010 = 100, country weight based on production 2017
FISI – European Foundry Industry Sentiment Indicator August 2019
Steel Castings
- 29 - © CAEF, www.caef.eu
Short Summary and Open Questions
Bild: Fotolia, Nesterov Vasily;
- 30 - © CAEF, www.caef.eu
• Trade policy impulses overshadow the economic cycle
• Permanently trade conflicts delay investments
• Decisive uncertainty factors with negative potential beyond 2019:
• Middle East
• US/China
• US/EU
• Brexit
• The Brexit is (hopefully) mainly priced in
After the last events all variants are possible again
• „All“ are directly or indirectly attached to the vehicle industry
• Suppliers demand on whether OEMs can manage challenges such as the
WLTP
• Plant suppliers to the mechanical engineering industry are dependent on
the strategic realignment of both OEMs and other suppliers
• Robotics as an early indicator?
Outlook I: In general
- 31 - © CAEF, www.caef.eu
• After a long-term upswing, especially in vehicle industry, the correction was overdue
from 2018
• E.g. Western Europe as a production location is under pressure in vehicle industry
Vehicle manufacturers, however, are traditionally internationally positioned
• Since 2018, in addition to the vehicle industry, mechanical enineering has also been
getting into a tailspin
• Vehicle and mechanical engineering industry revised their forecasts downwards
several times. These are not corrections based on cyclical effects
The unpredictability of economic policy actors „straddles“ into the economic cycle
• 2020: A prospect of bottoming out to a slight recovery is only possible if the
international actors are binding and predictable
• Mobility transformation, AI, demography, etc. have long-term effects,
therefore, investments for strategic adjustments or reorientation must be capitalised
regardless of the economic cycle
Outlook II: Important for the foundry industry
- 32 - © CAEF, www.caef.eu
FOUNDRY SECTOR
PORTUGAL
- 33 - © CAEF, www.caef.eu
Sector definition
• Small and Medium size companies
• Highly exporting the output
• Located at the North of the country
• Investment last years (2016/2018:
200M€)
- 34 - © CAEF, www.caef.eu
Markets
• Vehicule industry
• General Engineering
• Trains
• Civil construction (Taps…)
• Others (Valves, Oil & gas,
Decoration…)
- 35 - © CAEF, www.caef.eu
Ferrous and Non Ferrous Production
- 36 - © CAEF, www.caef.eu
Ferrous castings destination
14%
86%
Mercado Interno
Exportação
Ferrous castings destination
- 37 - © CAEF, www.caef.eu
Ferrous castings markets
- 38 - © CAEF, www.caef.eu
Ferrous castings alloy
28,0%
66,5%
5,5%
Ferro Cinzento
Ferro Nodular
Aço
- 39 - © CAEF, www.caef.eu
Produção de não Ferrosos por Mercados
22%
78%
Mercado Interno
Exportação
Non Ferrous castings destination
- 40 - © CAEF, www.caef.eu
Non Ferrous castings markets
- 41 - © CAEF, www.caef.eu
Non Ferrous castings alloy
64,1%
31,6%
4,3%
Aluminio
Cobre
Zinco
- 42 - © CAEF, www.caef.eu
A strategical partner for thefoundry industry
CINFU
- 43 - © CAEF, www.caef.eu
CINFU
A Training Center
Mission: the qualifying of thefoundry human resources and theavailability of technical services
- 44 - © CAEF, www.caef.eu
Title
Recomend study
- 45 - © CAEF, www.caef.eu
THANK YOU
9th INTERNATIONAL BRICS FOUNDRY FORUM
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