China Zhongwang targets to top current aluminium flat rolling capacity

The world's second-largest industrial aluminum extrusion producer, China Zhongwang Holdings (1333), expects output at a new Tianjin plant to top current capacity to meet domestic demand.

Phase one of the aluminum flat-rolled product project in Tianjin has a designed annual capacity of 1.8 million tonnes and actual capacity of 1.2 million tonnes. It will be fully operational by year's end, said chief financial officer Vincent Cheung Lap-kei, and then there will be a five-year investment payback period.

The Liaoning-based firm has already sunk 22 billion yuan (HK$26.8 billion) into the first phase. And a further 10 billion yuan will be invested by Zhongwang by the end of next year, Cheung added.

The demand for aluminum flat-rolled products is from industries such as aerospace and in making aircraft, ships and new energy vehicles.

"The gross profit margin of these high value-added products will reach 40-50 percent," said investor relations director Tang Yanjie. That is after a margin of 32.2 percent in the first half.

Although some manufacturers in the aluminum field are facing oversupply challenges, said an industry expert, China has a severe lack of high-end producers because of the upfront costs involved. Yet despite rising demand at home, Zhongwang faces dumping claims in its foreign business.

"We always export products under trade rules," Zhongwang responded, saying products sent to the United States "are deep-processed ones excluded from anti-dumping and anti-subsidy rules."

Zhongwang's foreign business has made up 13.5 percent of interim sales this year. But US sales dropped to 9.8 percent from 14.2 percent a year ago. Germany and Japan are key focuses for overseas business, Cheung said.