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Die casters see strong start continuing

Keywords: Tags  die casters, LME, London Metal Exchange, Nadca, North American Die Casting Association, aluminum, zinc, magnesium Nasaac


MARCO ISLAND, Fla. — The aluminum die casting industry expects the second quarter of 2014 to build on gains established in the first two months of the year.

However, concerns persist about the viability of the London Metal Exchange’s North American special aluminum alloy contract (Nasaac) and spiking costs for most secondary aluminum alloy grades (amm.com, Feb. 21), industry executives said at the North American Die Casting Association (Nadca) Executive Conference in Marco Island.

Unprecedented demand from automotive manufacturers continues to buoy much of the industry, with executives noting that demand from the sector increased about 10 percent last year compared with 2012. And as the global push toward lightweighting grows exponentially, automotive manufacturers are looking to diversify usage of die casting across a number of materials—including aluminum, zinc and magnesium—and examine a variety of new technologies aimed at reducing curb weight.

"We are seeing automotive companies explore new castings in everything from interior consoles to navigation units to larger components in engines," one executive said, adding that most industry insiders believe federal fuel efficiency standards will continue to spur growth for the die casting industry, both domestically and internationally. "We are seeing Europe come back pretty strong in the first quarter, the U.S. has been strong for about 24 months and demand from Asian markets continues to grow. Overall, we think the second and third quarters will continue to be very strong in terms of demand."

One area poised for growth is magnesium castings, executives said.

"We are seeing a big uptick in demand for these types of lightweight castings, especially from the automotive industry," a second executive said. "Ten years ago, nobody was thinking about using magnesium components in cars. Now the auto guys are really entertaining the idea of exploring alternative, lighter-weight materials. Big auto (manufacturers) know they have to pay attention to these types of things, largely because of the Cafe (corporate average fuel economy) standards."

The technology associated with magnesium alloys needs to improve before the material can be utilized in greater volumes, an engineer with a major castings manufacturer told AMM. "It’s an extremely unstable alloy; highly explosive and very reactive," he said. "However, we are seeing increased interest from die casters looking to explore magnesium technology for the automotive market."

Such innovation—and the costs associated with the development of new technology—continues to be negatively impacted by issues with the LME and its warehousing policies, executives said. Nadca in January submitted formal testimony to the Senate Banking Subcommittee on Financial Institutions and Consumer Protection, which is investigating ownership of metal, particularly aluminum, by warehouses and financial institutions (amm.com, Jan. 15).

Die casters said the problem with LME’s Nasaac is that prior to the emergence of the warehousing issues major automakers locked suppliers into long-term contracts that have since become very unfavorable.

"The die casters are the ones that get hurt on this," a third executive said in reference to warehousing issues related to Nasaac. "We are dealing with the biggest (auto) companies in the world and they are bullies; it’s one of the worst things I have seen. How can the LME publish an index that is absolutely irrelevant? It’s just plain bad for us."

In addition to warehousing issues, tighter government policies and regulations continue to be a major area of concern, according to executives and industry representatives.

Environmental regulations from the Environmental Protection Agency will be very significant in 2014 heading into 2015, an industry representative told conference attendees, pointing to numerous initiatives that could pose problems for die casters, including the National Ambient Air Quality Standards (PM2.5), essentially an all-encompassing rule aimed at governing all emissions standards. If the standards are increased, the representative said, die casters could be seriously impacted by restricted economic activity that will occur in regions penalized for failing to meet new emissions requirements.

In response to the new standards, Nadca recently submitted formal comments on the rules to a number of state and federal government officials. "We hope the EPA is sincere in soliciting input from stakeholders and takes serious account of the impact their decisions will have on manufacturing businesses," Nadca president Daniel Twarog told AMM in October (amm.com, Oct. 3).


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