Can Castings Growth Be Predicted?
Author: Date: 2015-9-24 16:59:19
Castings are a foundation of modern life. Their use pervades virtually every aspect of any economy. It stands to reason then,that castings demand can be correlated to overall economic activity. Differences in castings usage regionally might be correlated to the overall state of a region's economic development,adjusted perhaps to account for the importance of exports from a region of "castings-rich" durable goods. If this were the case,predictive tools for demand could be developed for castings demand,regionally.
Likewise,castings production by region should also correlate to the relative costs between regions for castings,especially as castings have become more commoditized. Cost drivers including labor,productivity,existing installed capacity,percent operating capacity,etc. could then be used to project where the world's incremental growth in castings production will be.
As an example,shown here is a correlation of overall global castings production to global GDP,adjusted for inflation. The correlation based on over 30 years of data is good. Roughly,as it turns out,for every one percent point in global growth (adjusted for inflation),castings growth globally is about 900,000 metric tons. Roughly,based on projections. The World Bank recently projected Global Growth will average from 3 to 3.3% during 2015 through 2017. If the correlation holds true,global castings production should grow to about 111 MM mtpa during 2017.
Deviations from this correlation can present insight into the global castings market. For example,castings production adjusted down sharply,well below trend line,during the Great Recession,but rebounded to trend by 2010. Most likely changes in inventory level to adjust for reduced demand caused castings production to reduce below trend.
Stay tuned for regional projections of demand,as well as supply. Find out where the new tonnage will be cast!