Forgings
Market, Supplier, Risk and
Competitive Intelligence

Industry Outlook & Drivers

Global Market Outlook on Forgings

• The demand figures for forgings with end-use industries, such as automotive, oil & gas, construction, machine tool, etc., are high with ferrous material forgings
• With increasing demand from various end-use industries, the forgings production is expected to reach $84.25 billion by 2022 with a CAGR of 6 percent over 2018–2022
• China holds the largest share and accounts for ~33 percent of the overall global market size, due to the increasing demand from the automotive and machine tool sector
• The global forging industry market size is over $74 billion at present. The production size in North America is over 2 MMT while the production size of forgings in China is over 12 MMT.
• The forging market is expected to grow at a CAGR of 5.5 percent to 6 percent according to forging market experts. 
• The top forgings manufacturing companies include NSSMC, Alcoa, ThyssenKrupp AG, and Bharat Forge. Alcoa is one of the forging suppliers in the USA.  
• Forging is categorized according to the temperature at which the activity is performed such as cold forging.
• Apart from cold forging, the different types of forgings include metal forging, steel forging, impact forging, open die forging, closed die forging, open die forging, closed die forging, powder forging, seamless forging, and drop forging. These are different types of forging methods that will be in higher demand in the forecasted period.
• The global metal forging market size will be valued at more than $70 billion according to forging industry experts. 
• China has the biggest metal forging market share and this is expected to continue in the coming years according to Beroe experts. China is the largest consumer and producer of metal forgings. 
• The global automotive forging market is expected to exceed $50 billion by 2023 according to statistics and reports by experts. 
• Forging is a part of the fabricated metal product manufacturing industry. 
• The industrial manufacturing and durables industry is studied in the report too.

Forgings Production by Material

•  More than 95 percent of the forging output globally are made from Steel

• Other materials used include titanium and aluminum. The type of materials to be used depend on the application.

Global Forging Industry: Major End-use Industry (2019 E)

• Automotive industry is the top end-use market (50 percent) for forging across regions
•  Automobiles have a number of structural forged components, requiring higher wear resistance, high impact, and sheer strength

• The automotive forging market has gained momentum since technological use began. Moreover, the expansion and increase in automotive production has increased over the years all over the world thereby boosting this industry to expand further.

• The automotive forging industry is expected to see a steady increase in demand as companies are looking for automating forging methods. Additionally, companies are showing increased interest in advanced technologies that can act as a catalyst for this market too.

• There is expected to be a decrease in the automotive components forging which will again push the growth of the automotive forging market in the many years to come. 

Global Market Overview: Forgings

• China continues to dominate the market share by holding around 33% of the overall forgings market. Consequently, Asia pacific holds the largest share due to development in infrastructure, advancements in automotive and construction segments.
• The E.U. is expected to have a slight increase in production share, which is driven by the increasing economic trend in Europe.
• North America is expected to witness a significant growth due to demand in the automotive segment and holds around 18% of the global automotive market.
• India continued to ramp up production at a higher rate, relative to global growth, based on sustained internal demand and automobile-related exports.
• Russia is currently buoyed by increased government spending and government demand for forgings, which was predicted to slow down due to relative demand satiation by 2018.
• Latin America is expected to witness significant growth between 2018 and 2022 due to the high demand in the end-use market and the contributing countries are Brazil, Argentina and Columbia.
• Automotive industry is the top end-use market (50 percent) for forging across regions. Automobiles have a number of structural forged components requiring higher wear resistance, high impact, and shear strength.
• Other major end-use sectors include machine tool, construction, energy, machinery, etc. Mining machinery industry consumes about 4 percent of global forgings production.
• With regards to capacity utilization, 40–45 percent of forging units are currently observed to be running at less than 75 percent capacity. Constraints for the forging industry currently include slow demand, foreign competition, energy costs, availability of labor, availability of capital, and raw material lead time.
• The outlook for drilling in the oil & gas industry seems to be positive as the capital spend continues to increase in the upstream industry. This might have a slighter impact in the oil & gas forgings market, since the oil & gas end-use market is only around 8-12 percent.
• The outlook for the oil & gas downstream industry is stable and is likely to increase.
• The agricultural end-use market is likely to be around 8–10 percent. Increasing demand for food and supplies drives the need for farming equipment, which has a direct impact on the forging industry outlook.
• The global market for medical device technologies is likely to be around $500 billion and is growing with a CAGR of 5–6 percent.

Emerging Technologies

Process: Powder Forging

A forging technique for products requiring variable material composition. At present, in different stages of development across the world could emerge as key technology in the upcoming years

• While powder forging is rapidly growing in developed nations, it is still in its nascent stages across developing countries
• This technology allows different material compositions across different parts of the same component
• This is useful for components, like connecting rods, whose ends are subjected to different levels of stress
• In this process, custom blended powders of various alloys are placed along a die and compacted into a rough shape and sintered. This is then placed in the final component die and hot forged
• These components require very little secondary machining and have very high precision
• In India, Mahindra Forgings is currently carrying out research on powder forgings

Consumables: Forging Lubricants

Graphite Free Lubricants

• Lubricants are important cost saving levers in die forgings. This is because a good lubricant can help improve ease of operation as well as increase die-life
• In closed die forgings, die costs account for ~15 percent of total cost. Therefore, any improvements in die-life would lead to significant cost savings
• Over the past decade, there has been a move to replace graphite lubricants, due to economic as well as environmental considerations
• Synthetic, water soluble graphite free lubricants have the following advantages over their traditional graphite based counterparts

• While synthetic lubricants have the above advantages, these have mainly been proven with respect to small – medium components (up to 12kg). More work in this area is expected in the future for large components as well

Insights: Procurement Practices & Contract Structure

• While auto contracts are long term with repeat orders, non-auto sectors, like power generation, construction & mining, involve large, one-time orders
• Chinese suppliers, in general, prefer advance payment through bank transfer, typically 30 percent on order placement and remaining before shipping
• Relevant duties and taxes are added to complete the quote
• In case of exports, export subsidies by respective governments play an important role in deciding the final price

Cost Structure

• The main cost drivers for forged components are raw material (steel and aluminum) and energy (heating). These account for nearly 80 percent of the total costs
• The grade of raw material used is important and can cause significant changes to cost structure. For example, using a lower/higher grade could result in variation of raw material proportion from 45 to 60 percent of the total cost. The number of pieces produced also affects the cost structure and total costs
• Any price hikes by raw material suppliers directly affect the total component costs, and in turn, prices
• A 10 percent rise in material cost leads to a 6 percent hike in total costs. In order to combat price rises, suppliers build price escalation clauses in contracts
• Prices could be revised quarterly/bi-annually/annually, depending on the end-use segment and relationship with customers