The first quarter of 2024 of Italian foundries confirms uncertainties: they are navigating by sight in a sluggish market
In the first quarter of the current year, the recessionary dynamics of the foundry sector continues. The trend decline in foundry production in 2024 (i.e. compared to the same quarter of 2023) is -10.1%, despite the cyclical growth (+4.6% on the fourth quarter of 2023).
The turnover also shows a decline at a trend level: the data in fact show a contraction of -12.1% compared to the same period of 2023, influenced by a significant reduction in the cyclical push, which goes from +7.7% in the fourth quarter of last year to +0.6% in this last quarter.
This is underlined by the latest economic survey by the Assofond Research Centre on data relating to the period January-March 2024.
Production and turnover of Italian foundries
As regards the production of Italian foundries, the economic boost at the beginning of the year is not enough to cushion the loss compared to the production levels of early 2023: the trend remains negative and there are no signs that suggest a real change of direction in the near future.
Companies attribute the growth in production over the previous quarter partly to the greater number of days worked, partly to the growth in demand compared to the end of the year: among the foundries interviewed, in fact, some highlighted the entry of new customers and the creation of new products.
The reduction in turnover growth, again over the previous quarter, is instead mainly explained by the reduction in the quantity of products shipped, but there is no shortage of foundries that also indicate a contraction in sales prices. Among the companies that have seen revenues grow, a motivation related to a seasonal context prevails: in 88.9% of cases, an increase in the quantities shipped is indicated.
Sector dynamics in the first quarter of 2024 of Italian foundries
The most significant trend decline, in terms of production, concerns ferrous foundries (-12.6% on the first quarter of 2023). The dynamics that characterize non-ferrous metal foundries are different, which are at the same production levels as in the first quarter of 2023 (-0.2%). The growth in the fourth quarter of last year for these companies is equal to +17.5%, unlike the ferrous sector for which a slowdown is observed also in the economic values which, although slightly positive (+1.3%), are lower than those of the last quarter of 2023.
From the point of view of the turnover of Italian foundries, however, the non-ferrous component is unable to sustain, as in the case of production volumes, the general trend: also in these foundries the loss in the same period of 2023 is significant (-6.1%) even if less marked than that observed among ferrous foundries (-13.9%). For the latter, the trend has been continuously negative for three quarters, and in this latest survey also the economic situation turns negative again: the loss of turnover in the previous quarter is -1.1%. Non-ferrous foundries, on the other hand, remain in positive territory (+6.4%) even though this growth is more than halved compared to the immediately preceding quarter (+15.3%).
Climate of confidence and production of foundries in decline
A new decline in confidence in the economic context was observed in March. The Act index returned below the 50-point threshold, reached in February, and stood at 43.1 points, a value that indicates the insufficiency in the general sentiment of the sector over the reference period.
Although the majority (58.6%) of foundries continues to give a stationary opinion, 31.0% of the sample feels a slight worsening. As a result, expectations for the next six months are also decreasing. The Six index falls to 50 points: this is a minimum level of optimism, but a decline compared to the previous two months, when the index had started to rise again. Also in this case, the majority of foundries (41.4%) remains on a wait-and-see line, but the most optimistic companies decrease significantly. On the contrary, foundries that foresee a net worsening for the next six months (3.4%) and those with a still negative, although more cautious, expectation (27.6%) are growing again.
The comment of the president of Assofond
«The first three months of 2024 confirm the weakness of demand already evident at the end of last year», comments the president of Assofond Fabio Zanardi. «The stability of non-ferrous foundries, thanks to the automotive sector, as the rest of the mechanical sector is declining, is not enough to keep the entire sector afloat. For the moment, in fact, there are no signs of recovery for ferrous foundries. In short, we are dealing with an overall weak market. Even exogenous factors do not alleviate the concerns: on the energy front, we still record a strong price gap between Italy and the rest of Europe, which is very penalizing in terms of competitiveness. And we are still waiting for the measures promised to restore competitiveness to the industry: the implementing decrees of Transition 5.0, as well as Electricity and gas release. The hope is that these measures will arrive soon and that, together with the expected rate cut, they can help reactivate investments».
Source: In Fonderia – ll magazine dell’industria fusoria italiana