June 2004
  The newsletter for buyers and suppliers of castings and forgings

Hungary turns to light alloy production

by Gabriella Bicskei
Association of Hungarian Foundries

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Hungarian Economy report

  Foundry industry

The structural changes of the Hungarian foundry industry continued also in 2003. However not all the data arrived from the foundries yet, according to the preliminary figures the overall casting production in Hungary grew from 136758 tons in 2002 to 156269 tons in 2003.

Despite the unfavourable economic situation the production and sales of iron castings increased by more than 26 percent in 2003 to 79596 tons. It is due to the production increase of a new producer of automotive castings by about 17000 tons. On the other hand, most of the small and medium size iron foundries decreased their production. The share of ductile iron castings increased to 38.9% from 19.5% in 2002. Within the use of iron castings the increase of vehicle industry was the most significant.

The production and sales of steel castings continued its decreasing trend. It fell by 10% to 4779 tons (including investment castings). Almost every steel foundry had to decrease its casting production due to the fall of home needs, but mainly of export demands.

The increase of the aluminium casting production continued also in 2003 as it was expected, exceeding 66000 tons. However the dynamism of the earlier 20 percent increase slowed down to 5.4 percent. Like last year, mainly the foreign-owned, gravity or pressure die casting companies, equipped with modern technology could increase their production, delivering to the automotive industry. On the other hand, many of the small and medium size aluminium foundries decreased their production. As some big companies produce ready products from their castings in a greater extent (i.e. wheel disc, cylinder-head etc.), the home use of castings also increased. The share of sand castings further decreased to 0.4%, while the share of pressure die casting aluminium production continued to increase to 58.6%.

The production of the shaped heavy metal castings continued its decrease to 4853 tons. While the production of brass and bronze castings fell, the production of zinc castings increased slightly in 2003. Our statistics do not contain the volume and value of the continuously casted products.

Location of the main consumer areas for foundry products

The manufacture of machinery and equipment increased by 3.3 percent, however within that the production of agricultural and forestry machinery declined significantly by 26.4 percent. The manufacture of motor vehicles, trailers and semi-trailers grew by 13.5 percent. Exports of transport equipment also increased. Production was, on the other hand, down throughout the electrical industry by 26 percent. Ferrous metallurgy was stagnating, however aluminium production grew by 14 percent, mostly driven by export sales. Construction industry - following the boom in 2002 - attained only a minimal (0.7%) growth, although second half year's figures show a slight improvement in this sector as well. Significant infrastructure projects improving economic competitiveness started off in 2004. The act on high-speed road network development - passed in 2003 - disposes that 431 kilometre high-speed road has to be built by the end of 2006.

Expectations for 2004

Finally, in the second half of last year the previous expectations concerning the upturn of the global economy seemed to materialise: the actual figures also indicate a clear acceleration in the economic growth of the world economy's most important actors. Following the first half-year's stagnation the European Union also experienced growth. Germany overcame recession, and - although the just starting recovery of the largest Hungarian export market still appears to be vulnerable - even a modest expansion in Germany represented a significant driving force for the Hungarian economy in the second half-year. Hungary joined the EU on 1st May 2004, which opened a huge common market for a relatively small country. On the other hand the prices of raw materials (scrap, coke, pig iron) increased dramatically, and the energy costs grew significantly, too. Meanwhile the prices of castings are under strong pressure. Therefore it is very difficult to make any forecast for Hungary's foundry industry in 2004. Now it seems that the negative affects are stronger for the ferrous foundries, and most probably it will be a very difficult year, especially for the small and medium enterprises. We regret to say, but some of them won't be able to survive and have to close down. The aluminium foundries will probably further increase their production. The foreign-owned, fairly modern foundries will easier go through the difficulties, than the Hungarian-owned old ones. For them it is also easier to benefit from the advantages of the common European market.

Gabriella Bicskei
Association of Hungarian Foundries


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