Export competition from Chinese producers takes its toll on the industry.
Melbourne, Australia (PRWEB) October 18, 2013
Squeezed by increased imports, the high Australian dollar and falling downstream demand, the Aluminium Rolling, Drawing, Extruding industry is between a rock and a hard place. IBISWorld industry analyst Arna Richardson states, “during the global financial crisis, poor downstream demand from the construction and transport equipment manufacturing industries hurt revenue. Meanwhile, domestic demand has fallen and exports have failed to come to the rescue of the industry.” China has ramped up its production to feed its domestic market and exports to the world, including to Australia, at prices few can compete against. In view of these variables, industry revenue dropped away between 2008-09 and 2010-11, falling by as much as 45.6% relative to 2007-08 levels. While it has since posted a modest recovery, the industry remains far smaller than previously. In 2013-14, industry revenue will be worth an estimated $1.4 billion, of which just over half will be derived from the international market. Despite growth of 2.5% in 2013-14, the industry has still contracted at an annualised 5.1% over the five years through 2013-14.
Over the five years through 2018-19, the industry outlook is marginally better, as demand from some key downstream industries returns to modest growth. According to Richardson, “while the Australian dollar will ease relative to its recent historical highs, exports are not expected to make any significant headway on the international market.” In the meantime, competitively priced imports will continue to satisfy half of all domestic demand. It remains to be seen whether the former Federal Government's anti-dumping reform agenda will have any real effect on dumped aluminium extrusion products from China. While world aluminium prices will improve over the next five years due to supply constraints and strong demand from industrialising nations, the price increase will place significant pressures on Australian manufacturers already contending with a high cost base. To this end, industry players will continue to undertake cost cutting measures combined with efforts to right-size their capacity in view of changing operating conditions.
The Aluminium Rolling, Drawing, Extruding industry has a medium level of market share concentration. Over the five years through 2013-14, market share concentration has been increasing, although declines in the Construction division and cheap imported goods have threatened to displace domestic players from the industry. Over the past decade, business numbers have almost halved. Over the five years through 2018-19, market share concentration is forecast to continue its upward trend as larger businesses consolidate their operations in an attempt to create enough synergy to survive harsh business conditions. Small operators are likely to exit the industry, unless they can provide niche products at competitive prices. The industry’s major players are Capral Limited and Alcoa Australian Rolled Products. For more information, visit IBISWorld’s Aluminium Rolling, Drawing, Extruding report in Australia industry page.
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IBISWorld industry Report Key Topics
This industry consists of firms mainly engaged in hot or cold rolling, drawing or extruding aluminium. Also included are companies mainly engaged in manufacturing aluminium powders or flakes.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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