European Foundry Industry Sentiment

May 2022: Sta­bil­iz­a­tion of European foundries in uncer­tain times

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.
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. 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.

The FISI – European Foundry Industry Sen­ti­ment Indic­ator – is the earli­est avail­able com­pos­ite indic­ator provid­ing inform­a­tion on the European foundry industry per­form­ance. It is pub­lished by CAEF the European Foundry Asso­ci­ation every month and is based on sur­vey responses of the European foundry industry. The CAEF mem­bers are asked to give their assess­ment of the cur­rent busi­ness situ­ation in the foundry sec­tor and their expect­a­tions for the next six months.
The BCI – Busi­ness Cli­mate Indic­ator – is an indic­ator pub­lished by the European Com­mis­sion. The BCI eval­u­ates devel­op­ment con­di­tions of the man­u­fac­tur­ing sec­tor in the euro area every month and uses five bal­ances of opin­ion from industry sur­vey: pro­duc­tion trends, order books, export order books, stocks and pro­duc­tion expectations.

CAEF Con­tact:

Till­man van de Sand
Sec­ret­ary Com­mis­sion for Eco­nom­ics & Statistics
phone: +49 211 68 71 — 301
mail: tillman.vandesand@caef.eu