Ag looking up globally
This blog has limited insight into short-term demand for agricultural castings. That said, the current issue of the Economist validates what this blog asserted a few days ago. Specifically, the global megatrend for agricultural demand is pointing up. The article states: “With rising incomes and more diverse diets, Chinese people are consuming much more fatty food and fizzy drinks. Meals now contain more than twice as much oil and meats as in the 1980s.” That means more grain for hog production and also more for soda production (think high fructose corn syrup).
This demand for grain will require more innovation from ag equipment makers who are trying to do more with less (meaning fewer skilled tradespeople). Part of the solution is combining large assemblies into one-piece castings. Please think ADI, people!
Mining Knowledge Nugget
I met with a very sharp and innovative engineer of mining equipment this week. His company makes some very large machines indeed, and they use a lot of castings. He told me something that makes perfect sense but that is not readily apparent if you are not a CPA.
Some large mining firms are still making money but a lot of global metals prices are down. That means the profits being made from mining operations are being invested elsewhere in non-mining activities. Once metals prices rise again the mining profits will be more likely to go into mining equipment because the ROI will justify it. Well, I suppose so!
Also, he validated something I heard elsewhere, which is that a lot of mining equipment being bought is being bought used. The mining industry is still using up the machinery left over from the 2009 recession. Yikes!