Report on Analysis of China’s Aluminum Foil Market in 2014



Report on Analysis of China’s Aluminum Foil Market in 2014

1. China’s domestic production of aluminum foil

China is a big country in terms of aluminum foil production, as it owns the highest number of most advanced 2000mm grade foil rolling mills in the world, with about 35 sets (with production capacity of about 400,000 t/a), 12 more than the combined sum total of all other countries worldwide.

According to Antaike’s data, in 2014 China’s aluminum foil production capacity is about 3,850,000 t/a, up by 10.0% than the previous year; the output was about 2,650,000 tonnes, up by 8.2%, production capacity utilization rate was about 68.8%, down by l.2 percentage points than the previous year.

In 2014, in the aluminum foil manufactured by China, affected by significant increase in the output of air conditioner foil, products rolled by twin-roll continuous cast rolled strip accounted for about 87.5%, up by about 2 percentage points than the previous year. China’s technology and process to manufacture aluminum foil with cast-rolled strip occupies world’s leading standards.

According to incomplete statistics, 5 aluminum foil projects were launched into production in China in 2014, and their combined production capacity is 220,000 t/a, mainly including:

● 120,000 t/a light gauge foil project of SNTO Group Aluminum Foil Division Phase III Project. This company’s aluminum foil project is completed in three phases, and Phase I has 2 1850mm rolling mills, which were launched in 2002; Phase II has 4 2000mm rolling mills of Zhuoshen Nonferrous Metal Processing Special Equipment Co., Ltd, which were launched in 2012; Phase III has 10 2000mm rolling mills of Zhuoshen Company, and were launched progressively since July 2014. After completion and total launching into production it can develop 200,000 t/a light gauge foil production capacity, thus become the world’s biggest aluminum foil manufacturer, 25% bigger than the 160,000 t/a of German Grevenbroich factory; all production use cast-rolled strips, and all are domestically produced rolling mills. The completion and launching of SNTO company 200,000 t/a Light Gauge Foil Project has milestone significance either in the development history of China’s aluminum foil industry, or in the development progress of global aluminum foil industry.

●The Aluminum Titanium Deep Processing Base of Ruixiang Aluminum Industry Co., Ltd located in Xin An, Henan, production capacity of flat-rolled aluminum product is 120,000 t/a, wherein aluminum foil production capacity is 30,000 t/a.

In 2014 there were 8 aluminum foil projects which were under construction, and their total production capacity is 950,000 t/a, mainly including:

●Nanshan Light Alloy Co., Ltd 40,000 t/a aluminum foil expansion project, which introduced 4 2000mm foil rolling mills of Achenbach Buschhutten GmbH Ltd.

●200,000 t/a sheet, strip, foil project of Holingol Liansheng Light Alloy Co., Ltd, with land area of 270,000 sqm, total investment 1.2 billion yuan, 1 1950mm Hazelett continuous casting and rolling production line was under construction, and production capacity of foil product is 40,000 t/a.

●3,000,000 t/a aluminum sheet, strip, and foil project of Inner Mongolia Holingol Jinlian Aluminum Product Co., Ltd, scheduled to be constructed in stages, wherein production capacity of foil product is 200,000 t/a.

●Aluminum foil workshop of Tianjin Zhongwang ultra large high-precision aluminum sheet, strip and foil project, including two installations; each installation contains key equipment of two series of 2000mm and 1850mm, and each has 1 rough and 1 middle, precise rolling mill. The maximum roiling speed of rough and middle rolling mills is 2000m/min, while maximum rolling speed of precise rolling mills is 1200mm/ min. Equipped with complete sheet shape and thickness control system, and complete range of finishing equipment. Aluminum foil production capacity is 100,000 t/a.

●120,000 t/a project of Ningxia Jiasheng Yuanda Aluminum Magnesium New Material Co., Ltd, scheduled to be completed and launched into production in 2015.

2. China’s consumption of aluminum foil

At present, in the total demand of China’s aluminum foil, export accounts for the highest percentage, reaching 30%, which first reflects that China’s aluminum foil production standard and product quality have received acknowledgement from the international market; secondly, it also implies the domestic aluminum foil consumption market still has very great development potential. With the improvement in people’s living standards, change in consumption concept, and heightening of environmental protection awareness, recyclable resources like aluminum foil will increasingly become favored by the domestic market.

China’s domestic consumption of aluminum foil is mainly reflected in packaging field, durable consumption field, power and electronic fields, construction and structure fields, and transportation field, the growth of these several fields directly determines the growth potential of consumption in the aluminum foil market. In 2014, boosted by satisfactory performance of domestic air conditioner, automobile and packaging markets, orders from food packaging, household-use aluminum foil, air conditioner foil, automobile thermal transfer brazed foil, and drug foil grew steadily. In 2014, China’s domestic apparent consumption of aluminum foil reached about 1,843,000 tonnes, up by 5.3%.

In the packaging industry, aluminum foil is mainly used in cigarette packaging, pharmaceutical packaging, beverage packaging, food packaging, and household-use aluminum foil fields.

According to data from the China Packaging Federation, in 2014 China’s packaging industry completed 1,480 billion yuan of gross industrial output value to become the world’s second biggest packaging power only next to the United States, so packaging industry has vast space of growth. Judging from the current condition, food and drug packaging fields in recent years experienced relatively rapid development.

Although the downturn in the dairy product market to certain degree weakened the growth momentum of soft packaging market in 2014, with the continual expansion of size in China’s fast food industry and the continual increase in variety and quantity of fast food and instant food products, the food exterior packaging also boosted usage of aluminum foil.

In addition to food packaging, the demand in household-use aluminum foil and drug foil fields are also rising steadily, and this is mainly because of improvement in the pursuit of better living quality and development of the aviation industry which boosted usage of household-use aluminum foil. The emergence of domestic new drug packet increased the usage of aluminum foil in pharmaceutical field.

However, tobacco packaging industry, which is a traditional application field, in recent years experienced continual decline in demand. This is mainly because the state government consistently implemented special control over tobacco industry which resulted in limited production growth each year and rapid growth in the percentage of aluminized paper, which formed substitution of aluminum foil interleaving paper.

Based on the above, the sources of China’s aluminum foil demand market mainly come from food industry, drug packaging and household-use aluminum foil; Antaike judged that in 2014, China’s apparent consumption of packaging-use aluminum foil reached about 747,000 tonnes.

The aluminum foil demand in China’s durable consumption field is mainly reflected in the air conditioner field.

In 2014, China’s household electrical appliance industry still remained in recession. Nevertheless, we discovered that without the influence of any policy external force, air conditioner market in the 2014 refrigeration year still maintained stable growth. According to data from the National Bureau of Statistics, from January to November 2014 China’s output of indoor air conditioners increased by 13.8% on Y-o-Y basis to 145,160,000 sets.

This is mainly due to the following several reasons:

Firstly, weather factor. At the end of the summer in 2013 the East China region experienced continual high temperature, which cleared stock in the channel. In 2014, as the weather turned hot relatively early, both the market and the weather are favorable for air conditioner production.

Secondly, market returned to normal growth. The third and fourth tier cities and fifth tier market presented relatively high level of Y-o-Y growth margin, thus guaranteed the domestic market size in the 2014 refrigeration year. The biggest contributor to the growth in air conditioner market comes from the growth in rural market. At present, the number of air conditioner units per 100 rural families is around 30 sets, so there is still space for growth.

Thirdly, product structure upgrading has emerged. In the 2014 refrigeration year, air conditioner enterprises one after another introduced smart air conditioner with higher single product performance, which pushed the air conditioner smart trend to its climax. In particular, the fact that the growth of sales amount is higher than the growth of sales volume in third and fourth tier markets indicates that, those markets not only involves increase in volume, what’s more important is that the demand structure is experiencing fundamental change, and consumption of mid to high end products has spread from first and second tier cities to third and fourth tier cities.

Fourthly, e-commerce sales gradually matured. As e-commerce sales gradually matures, more and more young people choose this convenient channel for shopping. At present, in web-sold air conditioners, most are mid to low-end products, such products are easier to be accepted.

The stable development of air conditioner industry provided powerful support to the consumption of air conditioner foil, it also offered guarantee for future consumption of air conditioner foil. Furthermore, up till now in high-temperature regions like India and the Middle East, air conditioner has not yet been popularized. As China is a big air conditioner manufacture country, and is equipped with the strongest competition advantages, there is vast space for growth in the export market. Based on these reasons, in the future the demand for air conditioner foil will continue to maintain stable growth.

Antaike judged that, China’s apparent consumption of aluminum foil in durable consumption field in 2014 was about 649,000 tonnes.

Judging from transportation field, automobile heat exchanger is the main usage field of aluminum foil. Heat exchanger is a device to convey partial heat of thermal fluid to cold fluid, automobile heat exchanger includes automobile air conditioner, water tank radiator, oil cooler, intermediate cooler and heater etc.

According to the latest figures from the China Association of Automobile Manufacturers, from January to November 2014, China’s total automobile output reached 21.4305 million vehicles, up by 7.21% on Y-o-Y basis. With the increase in automobile production and the rapid increase of aluminum usage rate in its air conditioner, the consumption volume of brazed compound aluminum foil in automobile heat exchanger also grew quickly. According to Antaike’s judgment, in 2014 the apparent consumption volume of aluminum foil in China’s transportation field is about 195,000 tonnes.

Capacitor industry is a big user of industrial-use aluminum foil; it is mainly used in the manufacture of power capacitor and electrolytic capacitor. Power capacitor is manufactured by winding up polished aluminum foil, polypropylene film, and capacitor foil, the specifications of commonly used aluminum foil is 6-7μm*260mm, 12μm*275mm, 16μm*90mm etc. Electrolytic capacitor aluminum foil includes three types of cathode foil, low-voltage foil, and high voltage foil. Its aluminum foil specifications are respectively 15-95μm for cathode foil, 60—100μm for low voltage foil, and 65—120μm for high voltage foil.

Electric power capacitor is mainly used for compensation of reactive power in power supply system; therefore its need will increase with the growth in power generation volume. Electrolytic capacitor is mainly used in electronic industry, it will increase its aluminum foil usage with the development of radio, television set, computer, electronic instrument and other electronic industries.

In 2014 the growth speed in China’s power grid investment showed obvious decline, which brought considerable negative impact to aluminum consumption in electronic and electricity fields. According to data from the National Energy Bureau, from January to November 2014, the completion amount of China’s grid basic construction investment is 346 billion yuan, up by 2.6% on Y-o-Y basis. Furthermore, in electronic 3c industry, in 2014 the output growth speed of main products also dropped sharply, from January to November, the outputs of handheld mobile telecommunication device, electronic computer and micro computer respectively grew by 7.1%, 0.6% and -0.2% than those of the same period in the previous year.

Currently, domestically produced aluminum capacitor cannot fully meet the market demand, and it is still necessary to rely on import products to meet the needs of partial domestic market. From each year’s domestic import name list, it can be found that the demand of this industry for aluminum foil has been steadily growing, but overall speaking, since the annual demand volume of this field is far lower than that of food packaging field, it has limited propelling power for demand growth. Antaike judged that in 2014 the apparent consumption of aluminum foil in electricity and electronic fields would reach about 162,000 tonnes.