The quarterly survey by the Assofond Study Center confirms the decline in foundry production in 2019, but companies see a possible recovery.
The latest analyzes by Assofond on Istat data show that the industrial production index of Italian foundries marked a further deterioration in the last three months of 2019, settling at 90.4 points compared to the fixed base, established on the average of 2018 ( quota 100). This is the new absolute minimum for the Italian foundry sector since the first quarter of 2016. Therefore, the decline does not seem to slow down which, from the peak of 105.4 points in the fourth quarter of 2017, remains constant between one quarter and other, except for the only moment of apparent interruption in the first quarter of 2019 (97.7), when the index recovered one decimal point on the previous quarter. The average loss from the maximum peak worsens and is equal, with the latest survey, to -1.9%. In economic terms, the fourth quarter of 2019 marked a further -4.9% loss of production of foundries over the third period of the same year, the worst decline since the beginning of 2018. There was also a decline on trend values ​​that shows no signs of changing towards: in 2019 the trend of the curve was contrasted, although stabilized at values ​​above -7.4% in the fourth quarter of 2018, the maximum point of decline compared to the corresponding values ​​of 2017, which, however, in the fourth quarter of 2019, it finds confirmation with the decline of -7.3% and a trend in decline again, as it happened a year ago. "It is a significant decline that should make us reflect, and the beginning of 2020 - underlines the president of Assofond Roberto Ariotti - does not suggest a reversal of the trend. To the structural reasons are added contingent criticalities and unpredictable phenomena. We are a country with no industrial policy, paying the price for a shrinking global market. We are subcontractors of a key sector of the European manufacturing industry, that of the car, which today is in trouble. There is a trade war in which we are unable to take a clear position. Finally, we are experiencing this emergency linked to the Coronavirus, of which only in the coming months will we really understand the consequences.

Extending the analysis to the main European countries, it appears that the Italian index on the decline in foundry production is, however, second only to the Spanish one, whose decline stops at 96.1 points, compared to its average production levels of the 2018. The other two main European countries, France and, above all Germany, perform worse, respectively, equal to 85.5 and 84.6 points. In all cases, the foundry sector recorded an absolute minimum and a 2019 in continuous decrease compared to the fixed base of 2018. On an annual basis, although Istat reviews and refines the index every month, the value calculated in the last quarter represents a good estimate on the annual budget of the sector and, if Italy marks a -5.3% on production in 2018, Germany reaches -7.6%, Spain limits it to -1.4%, while France presents the worst scenario, with a deficit of -8.1%.

In the breakdowns of the Italian sector, the greatest difficulties are recorded by the cast iron sector, with an index of industrial production falling back to 77.4 points; followed, but with almost ten points more, the steel sector, at 86.5 points, while non-ferrous foundries limit the decline to 93.4 points on the 2018 fixed-base index. The steel sector, which seemed to have acquired the right momentum for a recovery in the medium term, also marks a reversal trend, again negative and equal to -0.6%. Non-ferrous metals show a rising trend curve, but still in negative territory (-3.4%).

The visibility on orders remains flat and equal to 2.4 months, supported by the broader and growing average recorded in the steel sector (3.2) and by 3.3 months of non-ferrous metals in this case stable over the quarters previous. Cast iron offsets the general value, confirming the lowest figure ever, equal to 1.9 months, which it had already found in the third quarter. The use of production capacity is on the rise, rising, in the fourth quarter of 2019, to 69.3%, which accounts for 75.4% of steel, slightly down compared to the previous quarter, 69.6% of non-ferrous metals , in recovery. A confirmation of the moment of difficulty comes from the use of social safety nets: in the last quarter, the CIG rises rapidly ordinary, from 8.6% of the third quarter to 22.9% of responding companies; also the C.I.G. extraordinary growth is growing strongly, at 8.6%, almost six points higher than the previous period (2.9%). The number of foundries that resorted to solidarity contracts remained stable at 5.7%.

The climate of confidence, despite everything, resists the decline in foundry production in the fourth quarter of 2019: especially from the cast iron sector, the one in greatest difficulty, the opinions on the short-term economic situation are not all necessarily negative; if we add, moreover, the important share of steel optimists, it explains how the general index grows by more than ten points, reaching, in the last survey, 50 lengths, well above the values ​​assumed in the three previous quarters . 17.6% of the Assofond sample is optimistic about the beginning of 2020 and offsets a similar percentage of the pessimists. The majority, though with a lower incidence than in previous surveys, remain on an opinion of stability (64.7%). «Our optimism rests on our being resilient and projected towards the future - concludes President Ariotti. Before Europe moved, we took the path of environmental sustainability and recycling. Making a foundry in Italy today means doing it in the most efficient and sustainable way in the world. And this will count more and more. This is why we believe that we can also withstand this new difficult phase. Of course, we expect the same dynamism from our interlocutors. We need a season of political, economic and cultural reforms that once again place industry at the center. An impetus that I don't expect to end with 2020, but that will really start in recent months ».


Source: In Fonderia 02/2020