Market Data

The Castings-to-Steel Spread Is a Foundry-Health Gauge Hiding in the PPI

Steel and steel castings have separate producer price indices, and the gap between them is a window into foundry economics that neither index shows alone. When castings pull ahead of raw steel, the story is foundry energy and labor, not the metal itself.

Two steel indices sit near each other in the producer price data and are almost never read against each other, which is a shame, because the spread between them is one of the more revealing obscure signals in the metals complex. Steel mill products, the raw and rolled steel, index at 361.44 index (1982=100) (Jun 2026), up about 16.9% from a year ago. Iron and steel castings, the foundry step that melts and pours steel into shaped parts, index at 295.75 index (1982=100), up about 4.4% from a year ago. Over the past year the spread has raw steel outpacing castings, and which way it leans tells you where in the steel-to-part chain the cost pressure actually lives.

The spread isolates the foundry

A casting's cost is raw metal plus the foundry conversion: the energy to melt it, the labor to pour and finish it, and the yield lost to gates and risers. So the castings index carries the steel index inside it, plus the foundry's own cost layer. When castings and mill products move together, the foundry layer is stable and the story is just steel. When castings pull ahead, as happens in energy or labor squeezes, the foundry's own costs, energy above all, are rising faster than the metal, and a buyer of cast parts is paying for a foundry-specific squeeze that a steel-price headline would completely miss. The spread isolates a cost layer that neither index reveals on its own.

Why energy drives the foundry layer

Melting steel is brutally energy-intensive, so the foundry conversion cost is largely an energy cost, which ties the castings-mill spread to the power and gas markets. When energy runs hot, the foundry layer inflates and castings outrun raw steel even if the metal itself is calm; when energy softens, the spread compresses. That link makes the spread a two-for-one signal: it flags foundry-specific cost pressure and, because that pressure is mostly energy, it corroborates what the electricity and gas series are saying. A buyer sourcing both cast and fabricated steel parts can use the spread to know which supplier's increase to fight and which to accept.

Raw steel and a steel casting are priced by two different squeezes. The spread between them tells you whether to argue with the mill or with the foundry.

Using the spread as a buyer

The practical move is to stop treating "steel is up" as one undifferentiated problem and read the spread instead. If mill products are driving, the pressure is upstream in raw metal and affects everything steel; if castings are driving, the pressure is in the foundry step and concentrated in cast parts, which points toward design changes, fabrication alternatives to casting, or foundry-specific negotiation rather than a broad steel hedge. With the spread currently raw steel outpacing castings, a cast-parts buyer knows exactly which conversation to have, and it is a different one than the steel headline would suggest.

Six years of foundry pricing

Over the 36-year record castings prices have moved decisively rather than oscillated: from 118.20 at the close of 1990 to 295.75 today, up 150%, and now at the top of its 36-year range. A change of that size across a span this long is a level shift, not a cycle, and planning that assumes a return to the 1990 figure is planning against the whole record.

Use the metal price sensitivity calculator to separate raw-metal exposure from conversion-cost exposure. Price your steel parts

Published 2026-08-06.