Industrial Breakthrough in the Era of Meager Profits—The Reform and Opportunity of Aluminum Processing Industry

As the world's largest aluminum producer, exporter, and consumer, China has passed the golden period of rapid development in the past decade or so. Under the background of slowing global economic growth and weak demand, although China has become an important aluminum supply base in the global aluminum industry, it is affected by many factors such as overcapacity, tight financing and sluggish markets. The aluminum processing industry has entered the era of meager profits, and the expansion of applications and innovation driven is still an important step in resolving excesses and enhancing core competitiveness. How to treat the opportunities and challenges facing? How to find new application areas? How can aluminum processing companies break out of the trend?

Current industry status

The aluminum processing industry mainly includes extrusion materials, foils, plate strips and die castings. In recent years, the scale of investment in China's aluminum processing industry has gradually increased, with a rapid increase in production capacity, and a high starting point for technical equipment. Many aluminum processing companies have world-class equipment. According to rough statistics, in more than a decade, the output of these products has increased at a rate of about 20% per year, and the upstream and downstream integrated industrial chain has been continuously improved. At present, China's aluminum products not only basically meet domestic demand, but also have significant growth in exports.

Dong Chunming, general manager of Shangli Times Metal Information Consulting Co., Ltd. pointed out that in the past ten years, it was the golden age of China's aluminum processing materials and aluminum products exports. The rapid development of the domestic aluminum industry gave birth to exports and also drove domestic The consumption stimulated investment in the aluminum industry chain.

Aluminum industry clusters and the aluminum industry park economy have also seen phenomenal explosions. Take Binzhou, Shandong as an example. On April 14, Vice Mayor of Binzhou City, Wang Wenlu, remarked at the first meeting of the Binzhou Aluminum Association in 2016 that under the leading role of Weiqiao Aluminum, after more than ten years of rapid development, At present, a large aluminum industry cluster has been formed within the city that integrates coal-electricity aluminum, upstream and downstream integration, domestic and foreign integration, and has become a demonstration base for lightweight high-strength alloy new materials and a feature recycling economy industrial cluster. In 2015, Binzhou aluminum-related enterprises had a revenue of about 200 billion yuan, accounting for 24% of Binzhou's GDP. The aluminum industry has become an important economic growth pole in the city. During the “Thirteenth Five-Year Plan” period, Binzhou will use Weiqiao Aluminum and Shandong Innovation as its leader, relying on Zouping, Beihai, Binzhou and other economic development zones to create 500 billion yuan of high-end industrial clusters, making Binzhou become China and even the world. "Aluminum Valley."

However, the reality that cannot be ignored is placed in front of the industry. At present, China's aluminum processing industry is facing severe challenges: the shadow of overcapacity is getting bigger and bigger, and the competition with the industry is very fierce. The company is blindly on the project, and the overcapacity has spread from the original low-end field to the high-end product field. There is a structural contradiction. For example, in aviation aluminum thick plates, track sections, construction extrusions, cans, car body panels and other fields, the project is more like a river crossing. It is expected that in the coming period, the competition among enterprises will become more intense.

An aluminum extrusion manufacturer, who declined to be named, told reporters that in recent years, economic indicators such as corporate revenue, profit, and profit growth rate have been unsatisfactory. The specific performance was seen in the lack of operating rate, processing fees, and low export prices. The sales led to a series of anti-dumping. The customers accounted for the heavy purchase price, the funds were generally tight, and the financing cost was high. This shows that the entire industry is in a state of inefficient operation.

Dong Chunming believes that China's economic growth rate continues to bottom out, and the aluminum and aluminum processing industry is a miniature and typical sample of China's industrial economy. In the coming period, domestic aluminum consumption will enter a stage of low-to-medium growth. He estimated that if the economy continues to decline, the export volume and consumption of aluminum and aluminum materials are likely to decline.

Opportunities and prospects

There is no industry that loses money, only the losing company. Under the new normal, China's aluminum industry must adapt to and enter the new normal. Despite the greater challenges faced by the aluminum processing industry, the industry must maintain its determination and confidence to see the market's potential and room for growth.

Although China has become the world’s largest aluminum consumer, there is a certain gap between the per capita aluminum consumption level and developed countries, and there is still room for improvement. At the same time, China's aluminum use stock levels (a variety of end products in use, such as automobiles, houses, refrigerators, etc.) are also low and are still in a stage of rapid accumulation.

Ren Xiaomeng, senior project manager of Reed Exhibitions, has been responsible for issues related to the China Aluminum Industry Exhibition in recent years. He summed up from the participation of aluminum exhibitions in the past, that domestic aluminum processing companies have a certain gap with foreign companies in terms of technological innovation, and they need to constantly “make up classes” and catch up. If domestic aluminum processing companies do their homework in innovation-driven work, they will get rid of the development of low-end surpluses and high-end shortages.

The expansion of aluminum applications is an important measure for economic restructuring and transformation, and it is one of the breakthrough paths in the adversity of China's aluminum processing industry. It can be seen from one case that in 2015, the production of aluminum trailers in the country reached several thousand units, which was not only included in the list of subsidized energy-saving products for domestic consumers, but also orders from companies such as Shunfeng, Shentong, Sinopec and tobacco, which are growing rapidly. Also achieved bulk exports. Therefore, domestic aluminum processing companies should focus on areas such as automotive body sheet, new energy, consumer electronics, medical and health, aerospace, defense and military, and expand the application of aluminum products in these fields to cultivate new industrial clusters and new economic growth. In order to improve the core competitiveness and international discourse power of the aluminum processing industry.

Promote domestic application, expand foreign markets

In addition to lightweight transportation, building formwork and fencing panels, aluminum alloy cables, copper-aluminum composite conductors, and aluminum alloy bridges, aluminum used in the consumer electronics market has also been developing rapidly in recent years. Mobile phones, laptops and laptops The replacement cycle of tablet PCs has gradually become shorter. The characteristics of aluminum alloy casings are low cost, light weight, environmental protection, and aesthetics, and will soon lead to a collective “replacement” of consumer electronics manufacturers. From the perspective of similar product prices at the International Consumer Electronics Show, the aluminum alloy fuselage has been changed from a high-end flagship configuration to a thousand-yuan configuration. It is expected that in 2016, mobile phone metal casing penetration will reach around 38%.

At the same time, the sudden emergence of new energy vehicles has led to a new round of lightweighting. Due to the impact of battery power and cruising range, in the field of new energy vehicles, aluminum alloys and other alloy castings are gradually replacing steel castings, and the usage has increased year by year. The formation of large-scale production of aluminum-magnesium alloy castings is an inevitable trend in the future.

2016 is the beginning of the “Thirteenth Five-Year Plan”. As a country along the “One Belt and One Road,” India’s aluminum consumption has become more prominent in recent years. The second largest developing country in Asia has an annual aluminum consumption of 3.5 million tons, maintaining an annual growth rate of more than 10%. In addition to the terminal aluminum, India has also shown great interest in aluminum processing equipment. The inexpensive and cost-effective Chinese equipment is very popular in India. Aluminium exhibitors said: "With the continuous expansion of Indian manufacturers' production capacity, India's aluminum industry is increasingly adopting new technologies and new equipment in order to improve the quality of production. China's products are very market in India. "It can be seen that the prosperity of India's aluminum consumption will bring about various development opportunities for China's aluminum processing companies, technology consulting companies and equipment manufacturing companies.

For the above application areas, Yan Xiaomeng said: "We are actively standing with exhibitors, through the investigation of the consumer electronics industry, published "Aluminum White Paper for Consumer Electronics" to truly and objectively help exhibitors analyze the new deep processing field. In addition, we will also hold activities such as the Aluminum Forum for Consumer Electronics. We hope to promote the upgrading of consumer electronics products, promote the development of consumer electronics aluminum, and develop new aluminum in the traditional applications of automotive, packaging, and construction. The scope of application of materials.” It is understood that in 2016 China International Aluminum Industry Exhibition will also hold “Indian Guest Country” activities to help exhibitors build bridges into the Indian market, and then provide a broader platform for opening the entire Southeast Asian market.

After a decade of gold development, both Chinese aluminum companies and other global aluminum companies have entered a new phase of deep adjustment. Promoting application, stabilizing growth, seeking innovation, and destocking are the fundamental approaches to the breakthrough of China's aluminum processing industry, and are the ultimate goal of industrial survival and development.