The metallurgical machinery and plant engineering sectors represented by VDMA Metallurgy were cautiously optimistic in the latest trade association economic survey and expect sales growth in the low single- and double-digit range in 2023.
2022 in retrospect
In 2022, production volume in three subsectors in Germany increased by a good 19 percent overall in value terms. However, while manufacturers of metallurgical and rolling mill equipment and thermoprocessing equipment were able to exceed the volumes of 2019, foundry machinery production is below the volume of the pre-pandemic year. Compared with the previous year, the production of metallurgical and rolling mill equipment increased by 34 percent on a weak basis to 1.45 billion euros. Production of thermoprocessing equipment exceeded the 2 billion mark for the first time since 2018, rising to 2.18 billion euros (up 20 percent). In contrast, the value of foundry machinery produced in 2022 was a good 5 percent lower than in the previous year (approximately 652 million euros).
Challenges facing the Industry
Geopolitical turmoil and high inflation were the reasons for the restrained export growth of the metallurgical plant engineering sectors in the first quarter of 2023. In detail, however, the sector trends moved in different directions during this period.
Exports of metallurgical plant and rolling mill technology moved back toward pre-crisis levels with a 34 percent increase between January and March 2023. The top target market during this period was India. Already in 2022, almost 15 percent more metallurgical and rolling mill technology was exported from Germany worldwide on a low prior-year basis (628 million euros).
Exports of thermoprocessing technology increased slightly again between January and March 2023 (up 4 percent), after falling 3 percent short of the previous year's figure in 2022 (1.67 billion euros). From January to March, the USA and China played the main role in exports - with opposing trends (plus 33 / minus 43 percent).
There were no signs of a trend reversal in foundry machinery exports from Germany in the 1st quarter of the current year. Compared with a year earlier, exports were down by a quarter. This development is based on strongly diverging market trends: While exports to Switzerland, the United Kingdom, Hungary and, outside Europe, China and Vietnam increased, exports to important target markets such as the USA and Austria declined. As in the previous year, the EU27 countries took less foundry technology from Germany (2022: minus 5 percent).
Forward-looking industry expectations
Order intake by foundry machinery manufacturers outperformed the mechanical engineering average in the 1st quarter of 2023, with price-adjusted orders up 5 percent. Orders from non-euro countries made a major contribution to this trend. In 2022, orders had declined by 11 percent on a price-adjusted prior-year basis, which was below pre-crisis levels. Foundry technology participants in the current trade association business survey expect sales growth in the mid-single digits for 2023.
With a result of plus 1 percent in price-adjusted order intake in Q1 2023, thermoprocessing technology is also one of the above-average performing sectors measured against the overall mechanical engineering sector. The year 2022 had closed with a minus of 5 percent in orders. In the current trade association economic survey, participants from the thermoprocess technology sector expect sales to increase by around 10 percent in 2023.
According to the trade association's business survey, participating manufacturers of metallurgical and rolling mill equipment expect sales growth in the low double-digit range (approx. 15 percent) in the current year. However, order intake could stagnate at a high level, albeit against the background of extensive order backlogs.
