Aluminium processing industry advent of innovation in winter opens up new applications for blue oceans

Since the beginning of this year, the trend of non-ferrous metals has weakened and the prices have fallen one after another, especially in the third quarter. The price of aluminum has fallen below the ten-thousand yuan mark, and domestic electrolytic aluminum, zinc and nickel companies have generally experienced difficulties and have successively cut production. In contrast, the aluminum processing industry performed better in the non-ferrous metals industry. Data from the China Nonferrous Metals Industry Association shows that from January to September this year, the aluminum processing enterprises above designated size achieved a profit of 37.7 billion yuan, accounting for 54.5% of the total profit of the color metal processing industry of 55.3 billion yuan, accounting for a total of 95.5 billion yuan in total profits of the entire non-ferrous metals industry 39.3%.

Although the performance of the entire non-ferrous metals industry is bright, Zhang Jilin, deputy director of the China Nonferrous Metals Processing Industry Association, pointed out at the “8th China Yangtze Delta Aluminum Forum and 2015 Shanghai Aluminum Industry Association Annual Meeting” that he had attended the annual meeting. This year, the aluminum processing industry has also experienced reductions in orders, excess production capacity, increasing competition for homogenization, and inefficient operation of the industry. Enterprises should implement innovation-driven, professional and refined technologies.

Data from the China Nonferrous Metals Industry Association showed that from January to September, aluminum processing completed a fixed asset investment of 139.27 billion yuan, a year-on-year decrease of 0.31%, a change in the trend of double-digit growth for many consecutive years. “This means that the aluminium processing industry has been building for many years and the development of scale has basically ended. The future investment will be structurally improved and the investment will be more precise. This is what we would like to see.” said Zhang Jilin. .

However, over the past few years, the heat of investment in aluminum processing has caused excess production capacity to spread from low-end products to high-end products. Overcapacity has also led to increasingly fierce homogenous competition.

Zhang Jilin pointed out that from 2006 to 2014, non-ferrous metal processing industry completed a total of nearly 149 million yuan in fixed asset investment, an average annual increase of 32%, of which the proportion of investment in aluminum processing has remained at about 50%. “A lot of investment is focused on high-grade aluminum strip and large extrusion products, causing serious structural overcapacity. For example, aviation aluminum thick plates, the current national production capacity is 350,000 tons/year, and after completion, the production capacity is only 1 million tons/year. However, the global demand does not exceed 600,000 tons per year, and China’s demand after 2020 will not exceed 100,000 tons.”

The sluggish consumption of end-users this year has made competition even fiercer, and aluminum processing companies have also felt the “winter” winds.

“If companies with significant comprehensive advantages, such as good brand effect, strong technical strength, high management level, and strong financial strength at the end of last year and early this year, still do not feel the impact of the economic downturn, then since the second half of this year, the impact has been Started transmission to a considerable number of brand enterprises." Zhang Jilin said. He introduced that compared with the same period of last year, some brand enterprise orders have increased, but the increase has decreased significantly. Taking the top 20 architectural aluminum extrusion companies selected by the China Non-ferrous Metal Processing Industry Association as an example, except for individual companies last year, they all had an increase of over 18%, and some of them increased by as much as 50%. This year, the increase of many companies has dropped to Number of digits. "The winter in the aluminum processing industry has arrived," he said.

In addition to the reduction of sales orders, companies have also faced rising costs such as human resources, finance, and environmental protection, and processing fees have continued to drop. Zhang Jilin introduced that from January to September this year, the aluminum processing enterprises above designated size achieved a total revenue of 748.3 billion yuan from the main business, a total profit of 37.7 billion yuan, and a profit margin of 5%. “And the profit rate of some excellent aluminum processing companies in foreign countries has remained above 12%, and the inefficient operation of the industry remains the same,” he said.

Although orders for some traditional aluminum consumption areas have been declining this year, some new areas of consumption have seen encouraging growth, and the effectiveness of expanding aluminum applications has gradually become apparent.

According to Zhang Jilin, the number of license plates for all-aluminum tankers and semi-trailers this year was 3613 units and 3571 units respectively, while the total number of license plates for all-aluminum tankers and all-aluminum container carriers last year was 1,700 units. Taking enterprises as an example, Shandong Junlin Group produced a total of 270 aluminum trailers (all vans) from January to September this year, compared with 120 last year, an increase of 125%. From January to September this year, Hunan Tongtong completed more than 1,100 vans and aluminum container carriers.

In addition, the Aluminum Non-ferrous Metal Formwork Application promoted by China Nonferrous Metals Industry Association has also made positive progress. It is reported that Shandong Huajian only a few hundred tons of building templates last year, this year's production reached 5,000 tons, Junlin Group produced more than 2,000 tons of aluminum templates this year, Guangya Aluminum has assembled more than 70,000 square meters of aluminum templates this year.

As for the application prospects of aluminum in the future, Zhang Jilin remains firmly optimistic. “There is a huge potential for aluminum consumption growth compared with developed countries. From the consumer perspective, aluminum still has a lot of potential to tap.”

Zhang Jilin stated that aluminum has broad prospects in construction, transportation and electricity, packaging, and daily necessities. In the field of architectural aluminum alloy formwork, aluminum alloy fencing panels and roof panels, if it replaces 10%, it can drive 2 million tons of aluminum alloy extrusion material and about 1.5 million tons of aluminum alloy sheet consumption; aluminum alloy doors and windows On the other hand, the country’s old buildings total 420 square meters, and over 90% of them are not energy-efficient. If energy-saving is implemented for 10% of them, it will drive 5 million tons of aluminum insulation consumption per year. In the transportation sector, the country currently has about 3.5 million heavy semi-trailers in the society, and less than 2% of all aluminum trailers. If it reaches the level of Europe and the United States, it is conservatively estimated that it will increase aluminum consumption by 7 million tons.

“Aluminum has broad application prospects in fields such as composite furniture, bicycles, sports and entertainment equipment, various function ladders, and suitcases that are closely related to the daily lives of ordinary people. However, enterprises need to dig out market demands and conduct research and production.” Jilin said.

Auto body panels and aeronautical aluminum panels have been short-cuts for China's aluminum processing. This year, both products have achieved breakthroughs. It is reported that after years of research and development, SWA has realized the quantitative production of aluminum alloy sheet for auto body and started to supply it to customers. Nanshan Aluminum's automotive aluminum alloy sheet products have also gone offline. In addition, SWA has developed the largest cross-sectional area (over 300,000 square millimeters) of ultra-thin and super-thick aluminum alloy pre-stretching plates in China for three years, becoming the third aluminum processing company in the world capable of producing this product. The breakthrough in technology also laid the foundation for China's advancement from a big aluminum industry to a strong country.

“The development of aluminum processing in China is mainly from tracking imitation abroad, which is necessary in a specific historical period. However, at present, China is the world’s largest aluminum producer and consumer, and the level of technology and equipment has reached a certain level. The development of relying on tracking and imitation has been unsustainable, just as long-distance running has already run ahead, and no one wants us to follow it up. We must rely on innovation to truly drive innovation,” Zhang Jilin said. He pointed out that to achieve innovation-driven needs to play an entrepreneurial spirit, relying on the wisdom of entrepreneurs, the vision of the market, unyielding will and fighting spirit to open up a new application of aluminum blue ocean.

Regarding the development of aluminum processing companies, Zhang Jilin believes that the future development path of aluminum processing companies is none other than large and strong or specialized or both. For large and powerful aluminum processing companies that are committed to being large and strong, they must earnestly do a good job in the transformation of development methods, accelerate the cultivation of core competitiveness, and create innovative research to minimize their own costs; Aluminum processing companies should develop deep processing, extend downstream, realize specialized production, achieve uniqueness, and realize an enterprise and an industry.

"There is no declining industry. It is better to be professional, to do fine, and to do it for a long time, so that it can be bigger and bigger blindly." Zhang Jilin said.