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Monday, October 17, 2016, 15:09

China aluminium makers to target auto, aerospace in global push

By Reuters
China aluminium makers to target auto, aerospace in global push
High-end aluminum alloy wheels produced at a mill in Zouping, Shandong province. Chinese smelters pledged on Friday to halt new mills and keep unused operations closed. (Photo / China Daily)

MELBOURNE - China's giant aluminium makers are pushing into the global automotive and aerospace markets, with industry sources expecting their presence to heat up competition and possibly spark a buying spree for Western metals companies.

China's top aluminium companies are venturing into the more lucrative parts of the global value chain, on course to seize market share from the likes of Alcoa and Constellium, as they look to buy into foreign firms to boost their technical know-how and expand their reach.

China's top aluminium companies are venturing into the more lucrative parts of the global value chain

The chief executive of Novelis Inc, the world's largest maker of rolled aluminium products, said last week he expected competition with Chinese producers to be "very fierce" over the next five to 10 years in the high-value-added sectors of aerospace and engineering - which so far have been dominated by European and US manufacturers.

"Certainly (Chinese aluminium makers) will be able to produce high quality products as well," Steve Fisher told the Reuters Commodity Summit in Seoul.

Zhongwang USA LLC, backed by Chinese aluminium magnate Liu Zhongtian, said in late August it would buy high precision aluminium product maker Aleris Corp in a deal worth $2.3 billion, marking the biggest entry by a Chinese company into the US aluminium industry.

The deal for Aleris, a supplier to the US defence industry, has yet to be approved by US regulators.

"If Aleris is acquired by the Chinese, it would be logical to think that there would be more competition within the higher value-added sectors such as aerospace and automotive. That's where the better margins are," said analyst Robin Bhar of Societe Generale in London.

"(But) Aleris is quite a significant supplier to the US military, so it's by no means a done deal."

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