China Zhongwang Ventures into Rolled Aluminum Market

Sing Tao Daily reported on March 14 that China Zhongwang (1333.HK), the largest manufacturer of industrial aluminum profiles, posted a net profit of RMB2.6 billion last year amid the U.S. anti-dumping and anti-subsidy investigation. Executive director and vice president Lu Changqing said in an interview that China Zhongwang will raise the proportion of domestic sales to cope with the situation.

We will give priority to the domestic business over export, but we will not give up on the U.S. market because of the anti-dumping probe. Meanwhile, the company will explore opportunities in other overseas markets such as Canada and Europe.

Domestic sales and export accounted for 56% and 44% respectively of China Zhongwang s total revenue last year. The company exported mainly to the U.S. and Australia. In October last year, the U.S. began an anti-dumping and anti-subsidy investigation on imports from China, and decided to impose a 137% anti-subsidy duty and a 33% anti-dumping duty on Chinese aluminum products, including those manufactured by China Zhongwang.

The company s revenue from the U.S. has dropped since after the incident. Lu said its effect on the sales and gross profit margin of the company will really show only after the U.S. gives its final verdict later this month. He expected that the company s exports to the U.S. will further go down this year, and that the ratio of domestic sales will be up to 60%.

In recent years, Industrial aluminum profiles have been applied to more areas in China, including automobile, express railway, electricity and new energy facilities, of which many steel parts are replaced by aluminum. Therefore, China Zhongwang is positive about the industry outlook in the country. In addition, some of the company s deep processed products are now exported overseas.

The company plans to develop the rolled aluminum business and manufacture new products like high-end aluminum plates and aluminum foil, and it is looking for suitable facilities. Lu said he is confident about boosting the company s sales and gross margin with high value-added deep processed products and rolled aluminum products. The company expects its production capacity of industrial aluminum profiles to reach 1 million tonnes at the end of 2013, up 56% from last year. Capital expenditure is expected to be raised to RMB1 billion this year to expand the demand from aluminum presses.