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Recently, Zhang Jilin, Vice President and Secretary-General of China Nonferrous Metal Processing Industry Association, participated in the 10th Yangtze River Delta Aluminum Industry Summit held in Hefei, Anhui Province and the 2018 Shanghai Aluminum Association Annual Meeting. At the meeting, he introduced the development status of China's aluminium processing industry and put forward some reflective opinions on promoting the development of the industry.

At the meeting, Secretary-General Zhang Jilin said that this year coincides with the forty years of reform and opening-up. During these forty years, China's aluminium processing industry has made remarkable achievements. Since 2006, aluminium output surpassed that of the United States as the world's largest producer of zui, it has remained the world's first for 12 consecutive years. By the end of 2017, China's aluminium processing capacity was 53 million tons and its output was 38.2 million tons, accounting for 60% and 57% of the world respectively. With the leading technology and equipment level in the world, a number of influential enterprises and industrial clusters have emerged. At the same time, the overall innovation ability of the industry has been constantly improved, which makes most of the aluminum processing products have strong international competitiveness.

China's aluminium processing industry has maintained a rapid growth trend for many years, but in the first half of 2018, the growth rate fell rapidly, and in the first three quarters, China's aluminium processing output showed negative growth for the first time.

According to Secretary-General Zhang Jilin's analysis, the reasons for this phenomenon are as follows:

1. Traditional consumption has declined, while some new consumption has not been replaced.

As a result of the introduction of a large-scale national real estate purchase restriction policy, the completed housing area and real estate sales area have declined year by year in the past three years. At present, the consumption of aluminium processing materials in the construction field has slowed down, and the future market may further shrink.

Transportation is the second largest consumption area of aluminium processing materials in China, accounting for 22% in 2017. Taking Zui's typical automotive industry as an example, China's automotive output decreased by 1.14% from January to October 2018, while sales decreased by 0.24% from January to October 2018.

Speaking of aluminium furniture, Secretary-General Zhang said that the consumption potential of aluminium furniture has not been fully released and is still in the embryonic stage.

2. The chain reaction of international trade caused by Sino-US trade frictions leads to worrying export prospects of aluminium materials in the future.

According to the statistical data, the impact of Sino-US trade frictions on China's aluminium exports this year is not obvious, but the future impact can not be ignored:

Exports in 2017 were 4.24 million tons, an increase of 4% over the same period last year; exports in the first three quarters of 2018 were 3.86 million tons, an increase of 21% over the same period last year. According to statistics, since 2014, there have been 15 international trade relief cases against China's aluminium products, including 6 new cases in 2018. Trade frictions are getting worse and worse, and future aluminium exports are full of variables.

3. There is no substantial improvement in the vicious competition phenomena such as product homogenization and price war.

At present, China's aluminium processing industry, in addition to aviation aluminium sheet, passenger car body sheet (ABS) and other individual high-end products are still not stable, mass production, commonly used large quantities of aluminium alloy processing materials products, can be produced, and the production capacity is seriously excessive, product competition is white-hot, the price war is intensifying, processing costs are getting lower and lower, the products sold into cabbage prices.

4. Costs of enterprises have been rising and profits of the whole industry have been greatly reduced.

In recent years, the profit margin of China's aluminium processing industry has shown a downward trend: in 2017, the main business income of China's aluminium processing industry was 103.89 billion yuan, and the sales profit was 48.6 billion yuan, with a sales profit margin of 4.68%. From January to August 2018, the main business income of the national aluminium calendering industry was 600 billion yuan, and the profit was 18.4 billion yuan, with a sales profit margin of 3.01%.

The main reasons are that the labor cost of enterprises is rising/the tax burden of enterprises is still high/the aluminium processing enterprises are in a weak position in the upstream and downstream industrial chain/the financing cost is still high/the environmental protection policy is becoming stricter, and the environmental protection cost of enterprises is increasing.

In his speech, Secretary-General Zhang Jilin put forward the following thoughts on how to develop the aluminium industry in the future:

We should be confident and guard against and defuse all kinds of risks in business. Attention should be paid to changing the development mode, focusing on and studying market segments, genuinely attaching importance to technological innovation and management innovation, and prudent expansion.

We have the global Zui good technical equipment, excellent enterprises and innovative entrepreneurship resources; in recent years, the downstream extension of aluminium materials has done a good job. Since 2012, the processing association has worked with the China Nonferrous Metals Industry Association to identify the theme every year, from all-aluminium trailers, aluminium alloy cables, aluminium alloy building templates, aluminium alloy fencing plates, new energy aluminium alloy body city. Municipal buses to aluminium furniture have done a lot of work in expanding the application of aluminium, and achieved remarkable results. Our policy environment is also increasingly conducive to the development of private enterprises. Although the growth momentum of the industry has weakened to some extent, the overall development prospects of the industry are still worth looking forward to.

If the competition of aluminium processing industry is the competition of fast layout in the past, then for most enterprises, the competition in the future is to find and occupy their respective market segments. Because the bulk materials have basically been partitioned, only a few high-quality and sophisticated product markets, such as automobile panels and aviation panels, need to be partitioned, but this is the goal of several large groups. Strict certification system and high-tech threshold prevent the vast majority of SMEs from moving forward. But a large number of market segments, especially suitable for our small and medium-sized enterprises to pay attention to, to discover, to excavate, to develop. For the vast majority of enterprises, the main battlefield in the future is to deepen in their respective market segments.