Ferrous Castings Market Outlook in GCC, 2017
GCC’s growing economy and Industrialisation are the biggest drivers of ferrous casting demand. Globally there are over 40,000 foundries, GCC on the other hand is at a nascent stage with 0.2 Million MT of production; Infrastructure and construction are the key drivers of consumption & growth. In the next 5 years the overall KSA Ferrous casting industry would grow at 5% CAGR and Rest of GCC at 3%. Local foundries in Gulf are currently focusing on ramping up their existing capacity and reduce dependency of imports in the region. This industry docket looks at the current scenario, dynamics and trends prevalent in the GCC Ferrous Casting Market. Key questions this docket will answer:
1. What is the supply structure of the GCC Ferrous Castings Market
2. How Foundries manufacturing ecosystem expected to evolve in GCC?
3. What are the trade dynamics of Ferrous Casting in the KSA & the Rest of GCC?
4. What are the drivers & restraints impacting key end user segments such as Valves, Pumps, Mining, Cement & Aluminium Smelters?
5. What are the value chains & key modes of supply of Ferrous Casting?
6. What are the key trends in GCC with respect to growth outlook and key industries which shall drive future growth?
7. What are the key success factors for companies in the Ferrous Casting Market?
- Frost & Sullivan - Introduction
- Frost & Sullivan Advisory
- Iron & Steel casting demand is expected to grow at 5% mainly driven by demand in Valves, Pumps, Cement, Mining & Aluminium smelters
- Global Foundry Industry Overview-China still biggest producer; castings consumption driven by passenger cars & CVs; light weighting trends increase need for Aluminium castings
- Table Top 10 Casting Manufacturing Countries (Y 2014)
- Globally 40,000+ producers with production of ~84 million MT; Producers from China, India, US major control 70%; GCC is nascent with 0.2 MMT
- Key Takeaways-Operational Efficiencies, Closer touch points with customers with regard to application engineering shall be a crucial success factor
- Diversification into various grades, end-user segments to derive higher margins; JVs/alliances critical for offtake agreements and market expansion
- Scope & Limitations
- Market Outlook: GCC
- KSA and UAE drive the market in terms of Local Production and consumption
- Market for Ferrous Casting is majorly catered through Iron casting which is a high volume & low value; Top 5 players control 20% market
- KSA: Ferrous Casting was estimated at around 119,670 MT in 2016; India & China are the major importers
- RoGCC: Ferrous Casting was estimated at around 188,585 MT in 2016; is a major exporter due to higher export focus by UAE producers
- KSA's Ferrous Castings demand comprises mainly Iron Castings (GI & DI) with 80%; Machined casting consists of approx. 70% of demand
- RoGCC's Ferrous Castings demand comprises mainly Grey Iron with 65%; Machined casting consists of 71% of demand
- KSA: Foundry Market Overview-Approx. 31% of domestic sales consumed in the KSA; Infrastructure & Valves & Pumps are the key drivers of the market with 78% demand
- RoGCC: Foundry Market Overview-Approx. 35% of Domestic Sales of Iron & Steel Castings consumed in RoGCC; UAE is the major producer
- Valves, Pumps, Cement, Mining & Smelters are the key drivers both from Volumes and value perspective
- Ferrous Castings Imports into GCC are mainly from India and China catering to the low end castings (Municipal Castings)
- Capacity utilisation is expected to increase in future along with forward / backward integration
- Import substitution key opportunity; India's economies of scale & China's export subsidies hinder local producers' capacity utilisation
- Vendor Selection Criteria - Price & Value Addition in the form of Machined Castings is a key factor for success
- GCC industry is characterised by Direct end user sales from local foundries; India & China sell their casting products predominantly through the trader route
- Voice of Customer-Imports delayed due to custom clearances; multiple local foundries preferred for local supply; India preferred import partner
- Mega Trends and their Impact
- Falling oil prices negatively impact govt. development budgets; countries to reduce subsidies, introduce 5% VAT by 2019
- Key Growth Trends in GCC-The Mining & Automotive Industry has a strong demand uptake for Ferrous Casting parts
- KSA's diversification strategy to reduce oil revenue dependence; budgetary cuts impact on non-oil private sector high due to reliance on govt. tenders
- Table Real GDP Growth***, the KSA, 2011-2014
- Housing and infrastructure development, growth in industrial sector and Aluminium smelters to be regional growth drivers
- Decision Makers spotlight-CEOs Perspective (1/2): Benchmarking with leading Indian/European foundries to drive production values; always-on technical support for customers to be key
- Decision Makers spotlight-CEOs Perspective (2/2): Potential end customers in the proposed foundry should perceive a distinct advantage in sourcing to ensure sustainability of proposed business model
- Appendix: Glossary
- Annexure: Our Services
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- Our Growth Consulting Canvas