are fully leased out to producers and traders who will fill them soon. Natural gas is in a similar situation, with storage tanks recently reported as full at the Port of Corpus Christi, TX.


While oil


producers have cut production in an attempt to reduce supply and increase prices, no such coordinated approach exists among producers of natural gas, allowing the current oversupply to drift unchecked.


When discussing the situation with our foundries, casting sales are anticipated to be down from last year by about 50-60%, and as we have seen in the past, there is a collateral effect on other sectors, such as pumps and valves and transportation, but to a lesser degree.


somewhat normal economic activity, we can certainly expect the trend to reverse, but not without leaving its mark. In my conversations with our Members, it is evident that the effect that the coronavirus has had on casting sales is as varied as the subsectors in the General Industry. Companies producing orthopedic implants and oil & gas components were hit worst, while others, such as those foundries manufacturing firearms and medical devices saw a short-term surge in production.


Orthopedic Implants


Orthopedics doctors are being redeployed for treating COVID-19 patients, and as a result of the high risk of exposure to patients, elective surgery is no longer a consideration. This has directly impacted implant producers, who have for the past decade enjoyed steady, substantial growth.


These


operations, the majority of which are captive foundries, have taken a serious blow resulting in the temporary slowdown of many foundries and a vast number of employee furloughs. Though this is a temporary situation,


foundries will not simply pick up where they left off, nor will they experience a bubble in demand, as the need for medical professionals treating COVID-19 patients


has been slowly


tapering off, as well elective surgeries have been resumed in a number of areas. It is important to note that the end- user demand for orthopedics is at an


®


all-time high, and is growing, fueled by the aging baby boomer population and the availability of better orthopedic technologies requiring less invasive procedures with shortened recovery times. So once we have neared a state of full economic recovery, it is expected that foundries serving this sector will be very busy.


Oil & Gas For the past several years, foundries serving the Oil & Gas industry have been confronted with a number of challenges affecting


casting sales. They have


struggled with oil and gas producers cancelling or pushing out orders to deplete casting inventory levels, while at the same time, fuel production continued to exceed demand, which is evidenced by falling prices for gasoline, heating oil and natural gas.


This


situation was compounded by tariffs resulting in the lack of affordable steel for pipeline, contributing to a decline in new exploration and the establishment of new rigs. This year, between the mild winter and the effects of the pandemic on economic activity, energy demand is down 30% while fuel supplies are brimming. At the end of last month, there was nearly 52 million barrels of oil (excluding the Strategic Petroleum Reserve) at the main US storage facility in Cushing, OK. This facility has 76 million barrels of working capacity, and while the tanks are not full yet, they


Summation The outlook for this year reflects an estimated 22% to 23% decline when compared to 2019, resulting in overall North


American investment casting


sales of $4.7 Billion. This sales volume reflects the lowest point the industry has seen since 2011.


While the pandemic has had a serious impact on each of our operations, with the prospects of recovery starting soon, the impact to most of our businesses will soon be behind us as we gradually emerge from this economic period. It is my hope that by the time I am putting together the outlook piece for the annual industry forecast, my crystal ball will be a little clearer and brighter. I have been tracking and analyzing our industry since 1990 and have been preparing market pieces for INCAST Magazine since 2014, not to mention contributing to these pieces since 2002. For the first time since sharing my view of the market with our readers, I am hopeful that my view is wrong and that anticipated industry declines are overstated. Time will tell. In the interim, I would like to hear


from you to discuss the market. Each of us has a different perspective of what we are going through and what tomorrow may bring. It is only through your help and the consolidation of our unique views of the market that my proverbial “crystal ball” will offer a clearer view of the future.


June 2020 ❘ 19


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