Chinese Demand for Metalcasting Equipment to Rise 15% through 2010

Feb. 13, 2007
FICMES analyzes five-year foundry equipment market

February 14, 2007 — According to a published report, the Foundry Institution of the Chinese Mechanical Engineering Society (FICMES) is forecasting that demand for modern production equipment by Chinese metalcasters will rise on avereage more than 15% annually over the next five years. The report is based on date gathered from 2000 through 2005, and is timed to the announcement of the Chinese government's 11th five-year plan. The plan is the latest in a decades-old series of economic initiatives for the centrally planned economy, which have been used to direct and justify investment in the absence of market principles.

China's 11th five-year plan was initiated at the start of 2006. Among the plan's official objectives, as summarized at the time, was "optimizing and upgrading industrial structures."

China has been the world's highest-volume producer of castings since 2001, with annual output rising at an estimated rate of around 10% over that time.

However, FICMES indicates that the quality of Chinese-made castings is below international standards, explaining that a large percentage of them are manufactured using outdated, or even manual, production technologies.

About 95% of the foundries in China, as tracked by China's National Bureau of Statistics, are small- and mid-sized enterprises with annual production valued at less than $15 million. These operations are representative of the Chinese foundries seeking to replace outdated production systems, or manual processes.

Their pursuit of higher-quality products, and greater efficiency, has Chinese foundries seeking to update their production systems, which is driving growth in demand foundry machinery.

According to NBS statistics, the gross industrial output of China's domestic metalcasting industry rose from $285 million in 2001 to $827 million in 2005, an annual increase of 30.5%. As well, revenues grew from $262 million to $772 million, growth rate of 31.0%. Profits also surged, by 46.4% annually.

While the metalcasting segment's fortunes improve, the domestic supply of metalcasting technology is improving also. FICMES points to improvements in automatic casting lines, as an example. However, a lack of domestic research and development in foundry technology means that investments in imported production systems are rising: about $300 million of diecasting systems were imported during 2006, while some offshore suppliers have set up domestic Chinese manufacturing.