Summary: Driven by favorable national policies in relation to energy saving and light-weight development trends in the transportation sector, the application of aluminium in downstream sectors such as transportation, machinery & equipment and electric engineering have been increasing. Coupled with new aluminium alloy and aluminium processing technology, the market potential for aluminium processed products is enormous. 

At the APEC meeting, China announced the set-up of a USD 40 billion “Silk Road Fund” to provide financing for infrastructure construction, resource exploration, and other industrial and financial cooperation projects for neighboring countries. Among the various infrastructure initiatives, the Chinese Government proposed to firstly develop railroad and highway projects connecting China and neighboring countries. 

“One Belt One Road” (OBOR) policies will bring multiple benefits to China. Through enhancements to the transportation networks on land, over maritime and in the air, it will enable China to create more business opportunities and gain access to more natural resources. The construction of this network in China and the Asia-Pacific region will also bring new opportunities to the transportation sector as well as its upstream and downstream industries. The construction of rail transportation will be greatly accelerated, and industries related to railway construction, transportation equipment and manufacturing stand to benefit directly.

Since aluminium is extensively used in the railway sector, especially in the manufacture of high speed train carriages, the aluminium extrusion processing industry is also expected to benefit from OBOR. Given that aluminium extrusion products for the railway transportation sector have stringent technical requirements, only a few selected aluminium enterprises have obtained the necessary certification to manufacture such products. China Zhongwang, being one of those few enterprises on the list, is poised to benefit from the rising development opportunities.

In recent years, high-speed trains and urban mass transit systems have been developing at an accelerating pace. Aluminium extrusions and aluminium plates are the key material for manufacturing railway bodies. High-speed trains running at 200km/hr have stringent requirements as to its weight, airtightness and anti-corrosion. In these three criteria, aluminiumalloy enjoys an absolute advantage over any other material. Therefore in China, high speed trains are primarily made of aluminium extrusions, implying that the demand for high-end aluminium products is considerable and will only continue to grow. 

Also notable is the increasing demand for railway transportation orders from overseas market. Recently, the Massachusetts Bay Transportation Authority awarded a contract to China CNR Corporation Limited (601299.SH) to deliver 284 subway cars. This was the first time a Chineserail transportation equipment company won the global bid in the U.S.

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CNR and CSR (601766.SH), the two largest rail transportation equipment producers in the world, might merge again after 15 years. Driven by the OBOR initiative, companies which have forged a business relationship with CNR and CSR are also poised to take off. 

China Zhongwang is one of CNR’s business partners. In early 2014, it was selected to provide large aluminium-alloy vehicle parts to Tangche Company, a subsidiary of China CNR, for manufacturing metro cars for the Fuzhou Metro.

Mr. Lu Changqing, Executive Director and Vice President of China Zhongwang, said: “The nation’s efforts to promote energy saving and light-weight development in the transportation sector, coupled with technology developments in aluminium processing, will bring increasing applications of aluminium products across a vast range of downstream sectors such as transportation, machinery and equipment, and electricity engineering. Given these positive advances, we foresee huge market potential for aluminium.Aluminiumalloy products are amongst the preferred choices for material when it comes to environmental protection. It can help improve fuel economy, reduce gas emissions, lower costs and increase efficiency in transportation. Leveraging our experience and advanced technology in aluminium extrusion products, China Zhongwang is well-positioned to seize the market opportunities.”