November 2023 Volume 5

INDUSTRY NEWS

Reasoning For a Downtrend and Reduced Volatility in Forging Orders By Ian Stringer

In August 2023, the FIA’s Orders and Shipments (O&S) survey showed mixed results, particularly in the comparison between shipments and bookings. Shipments saw a monthly increase of 4%, reaching an index level of 139, but recorded a 16% decrease compared to August 2022. On the other hand, bookings decreased, settling at an index of 106. This represents a 14% monthly decline and a 21% drop relative to August 2022. The shipment index for August signifies that activity was 39% higher than an average month during the baseline period of 2021. Bookings in August, with an index level of 106, were slightly higher than the average monthly level over the same baseline period. There has been a reduction in month-to-month volatility in the index, displaying a clear downward trend since Spring 2023. This decreased volatility likely indicates a reduction in the placement

of large orders and signifies a return to base, continuous flow order activity. Inflation, measured by the consumer price index (CPI), has been a closely monitored indicator since 2022, and it remained significant throughout 2023. The CPI reading for September was 3.7%, below the Federal Reserve's target of 2%. This suggests that the interest rate hikes initiated in March 2022 are beginning to slow down the economy and reduce inflation as intended. However, it might still be premature to expect a decrease in the prices of forging products. While the FIA O&S survey indicates that the shipment/weight index for impression die forging has remained relatively stable over the past two and a half years, the indices for rolled ring and open die forged products have surged by over 25% and 50% respectively.

Figure 1: Forging bookings compared to forging shipments. Source: FIA's O & S Survey

FIA MAGAZINE | NOVEMBER 2023 48