Excess supply and rising regulations will lead to falling profit over the year.
San Francisco, CA (PRWEB) September 07, 2013
Revenue for the Aluminum Smelting industry in China has been growing at an average annualized rate of 8.7% between 2008 and 2013 to $73.8 billion, says IBISWorld. As a basic metal, aluminum has a wide variety of applications within the Building Construction (IBISWorld industry report 4710), Automobile Manufacturing (3721), Power Grid Construction (4725), and packaging material industries. These downstream industries are strongly promoted by China's booming economy and rising urbanization.
The top four enterprises in the Aluminum Smelting industry are expected to account for 45.0% of industry revenue, representing a medium industry concentration level. The largest aluminum manufacturer, Aluminum Corporation of China Limited (CHALCO), is expected to generate a quarter of industry revenue in 2013.
With increasing downstream demand for aluminum products over the past three decades, aluminum-related industries developed rapidly, expanding output capacity as product prices appreciate. However, in the past five years, industry expansion has resulted in supply exceeding demand from downstream industries, leading to a much slower appreciation of primary aluminum prices compared to those of other basic metals. Additionally, as a high-energy consuming industry, the Aluminum Smelting industry has faced increasing power prices, macroeconomic regulatory measures and raw material costs. As a result, industry profitability has been weak, and in 2013, IBISWorld expects that the industry will experience a loss.
Profit margins for aluminum product manufacturers will likely continue to be slim or non-existent due to the rising prices of raw materials. However, some companies will implement measures, such as reductions in electricity used or the amount of raw materials consumed to produce a single item and establishing self-owned power generation plants to reduce operational costs. In addition, more advanced technology and production equipment will improve productivity and efficiency.
For more information, visit IBISWorld’s Aluminum Smelting industry report page.
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IBISWorld Industry Report Key Topics
Companies in the Aluminum Smelting industry in China refine aluminum through the smelting, electrolysis, and repeal casting of bauxite and alumina. They also engage in the smelting of recycled aluminum. The manufacture of aluminum products, such as aluminum packaging, aluminum doors and windows, spare parts, and similar items is not included in this industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.