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Uncertainties casting a shadow over European foundry sector

In December, the European Foundry Industry Sentiment Indicator (FISI) recorded a notable decrease, marking a downturn in the index to 90 points, reports the European Foundry Federation (EFF).

This adjustment negates the positive development observed in November, as the index experienced a decline of 1.6 points, settling at 90.0 compared to 91.6 the previous month. As 2023 was concluded, it became evident that the foundry industry continues to face challenges. The FISI, which commenced the year at 103.1 index points in January, now reflects the impact of persistent challenges such as high energy prices, geopolitical tension and conflicts, (skilled) labour shortages, and uncertainties surrounding the availability of raw materials. These factors collectively exert substantial pressure on foundries across Europe.

Despite struggling with these ongoing headwinds, the EFF says the foundry industry exhibits remarkable resilience. Foundries throughout Europe are navigating through the complexities, demonstrating their adaptability in the face of adversities. It is worth noting that the absence of subsidies and support from national and European policymakers adds to the industry’s burden. In contrast, competitors in Asia and the United States find themselves in relatively advantageous positions, encountering fewer challenges in these areas.Meanwhile the Business Climate Indicator (BCI) stands at -0.45 index points in December. This marks the sixth consecutive time that the BCI is below the critical threshold of 0 index points. The index decreased once again by 0.06 points from -0.39 in November. On this occasion the negative BCI can be attributed, as in the previous month, to reduced export order book levels. The ongoing geopolitical tensions in both the Middle East and Ukraine are playing a pivotal role in propelling this development.