This reporter learned from China Zhongwang that despite the setback in overseas markets due to the anti-dumping and countervailing investigations, the world’s second-largest and Asia’s and China’s largest manufacturer of industrial aluminium has strived to enter the U.S. market for a second time by actively adjusting product strategy.

 

On February 4, China Zhongwang’s Chief Financial Officer Vincent Cheung revealed during an interview that although the anti-dumping and countervailing investigations have affected aluminium exports, the Company is still actively developing new product varieties. “In the second half of 2010, Zhongwang started to export deep-processed products to the United States. The percentage of overseas sales in the company’s total sales is expected to grow from 2 percent in 2011 to more than 10 percent this year.” he said.

 

The so-called “aluminium deep-processing” mainly consists of cutting, welding and surface treatment. At present, China Zhongwang has completed the construction of an aluminum deep-processing center for its industrial plant, newly imported world-leading deep-processing equipment has begun installation, which will be used for the production of deep-processed products for the transportation, mechanical equipment and electrical engineering industries.

 

Previously, the US Department of Commerce made a final decision on its anti-dumping and countervailing investigations into several types of Chinese aluminum exports to the US. The department decided to impose anti-dumping duties of 33.28 percent and countervailing duties of 374.15 percent on some PRC companies, including China Zhongwang.

 

This has directly hurt China Zhongwang’s results in overseas markets. Figures indicate in 2009, China Zhongwang’s sales revenue from exports to the U.S. market amounted to RMB5.66 billion ($897 million), accounting for 40.8 percent of the company’s total revenue. The company’s sales revenue dropped to RMB3.07 billion in 2010, a year-on-year decline of 29.1 percent.

 

Worth noting is that the subsequent market growth in the PRC is gradually diluting the adverse effects of the U.S. anti-dumping and countervailing investigations, but China Zhongwang will not give up easily in spite of the setback in the overseas market brought by the anti-dumping and countervailing investigations.

 

“The anti-dumping and countervailing investigations targeted construction materials and some industrial profiles, which affected only the 1, 3 and 6-series alloy products, the 2, 4, 5 and 7 high-end alloy series were not included in the investigations. In the future, China Zhongwang will increase the proportion of 2, 5 and 7-series products to develop a high-tech, high value-added product strategy to circumvent the trade barriers of the overseas market for conventional products.” said Lu Changqing, executive deputy-president.

 

It was reported that as early as the end of 2010, China Zhongwang began to export small quantities of industrial aluminum deep-processed products to the U.S. market. Since the business was still in its infant stage, output was still small, with a gross profit margin of approximately 50%. In the future, with large deep-processing equipment put into operation, export sales of deep-processed products will achieve a large proportion of growth.

 

Vincent Cheung explained that the average price of deep-processing services of existing deep-processed products will be about RMB60, 000, which doesn’t fall within the scope of products under review by the anti-dumping and countervailing investigations, and will become a new profit channel after mass production begins at the new industrial aluminium deep-processing centre 

 

It was reported that in 2011, affected by the influence of property market regulations, restrictions from industry standards and the increase in cost of electrolytic aluminium, the aluminium extrusion industry was facing overcapacity and was in deep trouble. However, unlike the current downturn in the aluminium industry as a whole, Vincent Cheung told reporters, China Zhongwang’s 2012 annual production target is 500,000 tons, and order volume is expected to see a year-on-year increase of 20% or more. "Because of the price fluctuations of raw material of aluminum ingots can be fully passed on to customers, expected 2012 gross profit margin will further improve the Company's new profit channel on the foundation of last year’s performance." he said.