According to a report by the North American Die Casting Association (NADCA), over 50% of U.S. diecasting operations have implemented energy surcharges to offset the effect of rising natural gas prices. The same report, based on a NADCA survey of its members, a further 30% plan to introduce similar charges by year’s end.
Applying surcharges for volatile inputs has became a common practice in a number of metalproducing sectors in recent years, notably in the steel industry where producers have applied fees for scrap as well as energy.
"Energy surcharges are becoming a business reality because diecasting margins are simply too tight to absorb the increases in energy costs," stated NADCA president Daniel L. Twarog. "Surcharges have become commonplace in many industries, and they are more equitable than a general price increase since they can be adjusted as prices rise and fall."
NADCA points out natural gas is critical to melting processes used by most diecasters, and that U.S. natural-gas prices that have doubled since May. The group estimates that the cost of energy needed to produce molten metal for an 80-lb diecasting has risen from $1.69 to $3.38 over that period.
Officially, NADCA says the surcharges are an "inevitable short-term solution to the complex energy situation," but it is encouraging its members to reduce energy consumption altogether with technologies like scrap preheating, heat-transfer pumps, and preheated combustion air.
"Reducing melting temperatures is one of several steps diecasters can take that have the potential to cut energy bills at least in half," states Twarog.