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Foundry

Stabilization of european foundries in uncertain times

In the European foundry industry, there is again a slight optimism about the economic development in the second half of 2022.

In the European foundry industry, there is again a slight optimism about the economic development in the second half of 2022.

The European Foundry Industry Sentiment Indicator (FISI) increased by 0.6 points in May and reaches a value of 106.1 points. After the highest loss since the outbreak of corona pandemic in Europe in March 2020 the FISI has slightly recovered. After the decline in the previous months was caused by a war-related drop in business expectations for the upcoming six months, European foundries are now increasingly experiencing some positive effects on their business situation.

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Relocalisation brings more orders

While the sanctions against Russia were steadily tightened in March and April and the problems in the supply chains remain very apparent, several foundries seem to receive orders in the wake of relocalization. The global disruptions in the logistics industry have supported this trend and the willingness of customers to ramp up production in Europe.

Uncertainties in European vehicle manufacturing

On the demand side, May has continued to be characterised by uncertainties in European vehicle manufacturing. In particular, short-term orders and cancellations along several vehicle OEMs led to postponed and cancelled call-offs at supplying foundries. Contrary, the mechanical engineering sector continues to be characterised by a historically good order situation and high capacity utilization. Serving these orders is nevertheless a challenge for many foundries given the difficulties in production planning and raw material costs as well as availability. As such a twofold development in vehicle production and general engineering can be observed.

Meanwhile the Business Climate Indicator (BCI) decreased in May. The noticeable decrease of 0.33 points brings the index to 1.26 points. After the record level in April, the decrease is in line with the development of the FISI, following similar arguments. The downturn at the main stock exchanges and the fear of a recession are additional causes for the BCI to decline.

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