CAEF Report: European foundry industry faces headwinds as index declines in August 2023

The European Foundry Industry Sentiment Indicator (FISI) has recorded a decline, marking a shift from the positive trend observed in July 2023. With a decrease of 3.2 index points, the index now stands at 96.0, down from 99.2 last month.

Currently, a key challenge facing the European foundry industry is the shortage of new orders. With backlogs nearly cleared, new orders in various categories are needed. Despite the current relative stability in raw materials and scrap prices, the European foundry industry appears to be encountering light signs of weakening. Following the latest developments there is no turnaround in sight. High inflation rates and rising interest rates are putting a brake on new investments. Additionally, many foundry professionals express concerns about the future, given the availability and pricing of raw materials and scrap.

The European foundry industry, facing these challenges, is committed to deploying adaptability and strategic planning to navigate through this challenging landscape. Nevertheless, it is important to note that the holiday season could potentially introduce a bias into the reports.

Meanwhile the Business Climate Indicator (BCI) decreased in August as well. The decrease of 0.24 points brings the index to ‑0.33 points. This marks the second consecutive time that the BCI has fallen below the threshold of 0 points. It represents the lowest value since November 2020. The negative BCI can be attributed, in part, to a less favourable assessment of order book levels. Additionally, the observed trend in production over the past few months had a negative impact.

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.