Development Status of Chinese Aluminum Processing Industry in Recent Years



Development Status of Chinese Aluminum Processing Industry in Recent Years

Chinese aluminum consumption is on a robust rise. According to the 13th Five-Year Plan for nonferrous metal industry, the total volume of Chinese aluminum consumption will reach 43 million tons by 2020 and CAGR during 2016-2020 will achieve 7.24%. The present Chinese aluminum processing industry consists of two major players. One is domestic leading listed manufacturers that are equipped with advantages both in technologies and capital, such as CHINALCO. They are good at competing and enjoy substantial market share; the other player is domestic small and medium manufacturers that rely on competitive cost to fight for themselves a place in this industry. They are always prepared to get developed. In the meantime, they are exposed to fierce risks and can be knocked out of the game anytime.

Currently, there is a huge cap between China and developed countries in annual per-capita aluminum consumption and per-capita aluminum stock, so China has great potential in aluminum consumption. From the perspective of specific consumption fields, the aforesaid huge gaps can be found in construction, structure, auto industry, packaging and furniture industry, so these fields also enjoy great potential. Meanwhile, progress has been made in aluminum application scope expansion. Nationwide, aluminum alloy oil tank trucks occupy 8% of the total; aluminum alloy building template is in explosive production growth. Besides, breakthroughs have been made in aluminum-air battery commercialization and this promising industry will send the peak of aluminum consumption higher in China and even the whole world.

1. Features about Chinese aluminum processing industry operation

Six highlights of 2017 Chinese aluminum processing industry

Highlight No.1: international cooperation --- “Going global” accelerates

Under the driving force of “Going global” and “One Belt, One Road”, Chinese enterprises significantly accelerated their steps to work with international companies. In 2017, Chinese aluminum processing industry were more frequently engaged in collaboration with other countries.

China Zhongwang acquired Australia Silver Yacht and Germany Alunna. Silver Yacht is the top performer in aluminum alloy yacht industry while Alunna is the bellwether in backward extrusion of aviation aluminum alloy. Zhongwang set a precedent in Chinese aluminum processing enterprises acquiring leading foreign enterprises, which is of significant importance to China on its way to becoming a global aluminum processing power.

Bohai Piston plans to acquire 75% of TRIMET Automotive shares

Highlight No.2: the harshest one --- international trade friction is getting from bad to worse

The ever-increasing international aluminum trade frictions became the harshest highlight in 2017. Just USA initiated several trade investigations into Chinese aluminum trade in 2017. Among them, the anti-dumping and anti-subsidy (“double anti”) investigation into aluminum foil is the first “double anti” investigation to China initiated by the Trump administration. Preliminary determination of anti-subsidy investigation required that tax rate of 96.81% to 162.24% should be collected. This case continued to involve “surrogate country”, a discriminatory conduct. The “double-anti” investigation into Chinese aluminum strip was even an arbitrary one initiated by US Department of Commerce, which is, for the first time in 40 years, without any formal requirement from any related industry.

Highlight No.3: Nanshan Aluminum was granted the plate authentication by Boeing

On June, 28, 2017, Nanshan Aluminum was granted the aircraft plate engineering authentication by Boeing. That was when Nanshan Aluminum was officially included into vendor list of Boeing. It was also the first time for made-in-China aircraft aluminum alloy plate to obtain authentication from the biggest plane manufacturer in the world. Many authentications from other enterprises and organizations will follow this one to come; on Sep., 12, 2017, Nanshan Aluminum sent out the first order from Boeing, representing that China has risen to the globally advanced level in its capability of supplying aerospace-grade aluminum plate.

Highlight No.4: Recycling --- great progress has been made in the recycling of waste aluminum tanks

Delta Aluminum Industry set up the project in 2017 to construct the first 50000 TPY (ton per year) 3104 alloy ingot production line, using the technologies co-developed by University of Science and Technology Beijing, North University of China and Northeast Light Alloy Co. Ai Pusheng Regenerating New Material established the project of using waste aluminum pop cans to produce 3104 alloy slab in Changge, Henan. On March, 5, 2017, experts gave their opinions that the launching of these projects shall put an end to the state where Chinese recycling techniques of waste aluminum cans are 30 years behind advanced countries.

Highlight No.5: Localization of aluminum products --- getting gradually boosted since 2017

2017 is a phenomenal year to Chinese aerospace manufacturing. On one hand, it was in 2017 when China started its march to a big power. On the other hand, localization of all kinds of aluminum products in use has been getting boosted since 2017. The entire aircraft manufacturing will be covered with homemade aluminum products and aluminum matrix composites by 2022, from bat-size drone to giant An-225 Mriya, from civil planes to military planes and from visible planes to the new invisible fighter aircraft J20.

Highlight No.6: China Zhongwang – Tianjin aluminum strip project was gradually put into operation

2017 is a crucial year to Zhongwang’s Tianjin aluminum strip project. The first hot-rolling production line was put into operation in Sep., 2017. The second was put into operation in mid-2018. With temper rolling capacity of 1.8 million tons/year, Zhongwang has become the biggest single enterprise in the world in temper rolling production. Phase-2 construction is in plan and by then, total capacity will be upgraded to 3 million tons/year. The base is in Wuqing Auto Parts Industrial Park, boasting a total investment of RMB 46.6 billion and covering a total area of 5500000 m2.

2. Analysis on Chinese aluminum processing industry structure

Product standards and quality fully meet with international requirement and China is making its way to international market. Principal aluminum products in China follow the standards of Europe, USA and Japan so China is in line with international requirement. National Standard for Aluminum Alloy Building Profiles (GB-T5237) and its English version have been recognized and followed by many countries.

Trade frictions become normal. As China is increasing its aluminum products export volume and is getting good at competing, international trade protectionism is looming and trade frictions were frequently caused. A few countries even frequently initiated administrative investigations into Chinese aluminum products and brought “double anti” lawsuit against China. USA initiated “double-anti” investigation into aluminum foil in 2017 after its investigation (including 32 articles) into competition of Chinese aluminum industry in 2016. On 27, Oct., US Department of Commerce released the preliminary result of its investigation into Chinese aluminum foil “double anti” : export tariff of 96.8% to 162.2% should be imposed on aluminum foil imported from China. Final decision will be released in Feb., 2018.

Product Mechanization. Aluminum processing industry clusters have taken shape all over China, such as Nanhai District of Guangdong, Shandong Linqu Aluminum Alloy Building Platform, aluminum strip in Zhuyi, Henan, aluminum profiling used for industry in Liaoyang, Liaoning, Binzhou, Shandong, Holingola, Inner Mongolia, Wucaiwan, Xinjiang. These regions are making new deployment centering on electrolytic aluminum plants.

Upsizing of aluminum processing enterprises. Many enterprises boast annual capacity of 500000 tons and some even reach 1 million tons, such as CHINALCO, Zhongwang, Shandong Nanshan Aluminum, Fenglv Aluminum, Xingfa Aluminum, Huajian Aluminum.

Specialization of aluminum processing and production. Various development modes coexist. More enterprises lay emphasis on market segmentation, for example: Jianmei Aluminum focuses on high-end aluminum profile; Liaocheng Wanhe produces multi-hole flattened tubes used for heat exchange system, which occupies large market share; Shanghai Huafeng manufactures composite soldering materials. These enterprises are in moderate scale but occupy large market share and are with remarkable benefit.

Production customization. Manufacturers like Liaoning Zhongwang and Shandong Conglin have transformed from a supplier of car body platform to a manufacturer of rail car; Hunan Suntown works with logistics company to produce light weight high-end truck; it also works with PetroChina to produce light weight high-end tank truck. Hunan Suntown has transformed from a simple material producer to an overall solution provider. Just like aluminum profile enterprise becoming a provider of aluminum door and window, production customization is getting more and more overwhelming.

3. Analysis on market scale of Chinese aluminum processing industry

Chinese aluminum profile manufacturers can be divided into three hierarchies according to products: the first one mainly includes China Zhongwang, Xingfa Aluminum, LPSK, Liyuan Aluminum, Yatal Tech and Shandong Nanshan Aluminum that center on production of aluminum profile and are making their way to deep processing. In this hierarchy, mitigated competition is involved. The second one includes Dongliang New Material, Minfa Aluminum, Haomei Aluminum, Weiye Aluminum and Huachang Aluminum and so on (other enterprises mentioned in this report) that enjoy brand awareness but are limited to small scale and insufficient R&D ability in comparison with hierarchy one. Hierarchy three consists of too many enterprises that focus on low-end products and are subject to fierce competition, weak innovative ability and small scale.