Zhongwang plans expansion in capacity to meet rising demand

China Zhongwang Holdings Ltd, Asia's largest maker of aluminum extrusion products, aims to expand capacity to become the world's largest producer in the next two years, said a company executive on Thursday.

The Liaoning-based, and Hong Kong-listed, company plans to expand capacity to 800,000 tons by 2012 from the current 640,000 tons, to overtake the world's largest aluminum extrusion producer the US-based Sapa Group, said Lu Changqing, vice-president of Zhongwang.

"We will make the largest investment in medium-heavy aluminum plates this year, which will start production by 2013 to cash in on the country's surging demand from high-speed railways and aircraft manufacturers," he said.

"The medium-heavy aluminum plates will be crucial to maintain Zhongwang's growth in the future," he said.

Zhongwang held talks in February 2010 to acquire the aluminum firm Qinghai Guoxiong Industry Inc Co, but the deal fizzled out in August.

"We will expand our capacity to meet the growing orders, rather than acquiring other companies," said Lu.

Lu also said he expects proportion of exports to the US to decline further this year and the company will explore other markets to have a better balanced global distribution.

"We will further develop the market in Canada and Mexico, and explore new markets in European countries," he said.

The company reported a 26 percent decline in profits in the fiscal year 2010 due to the decline in export sales arising from a US anti-dumping and countervailing duties investigations.

The US International Trade Commission in May 2010 approved a US Commerce Department investigation on aluminum extrusions, stating that there was enough evidence to show a massive increase in imports from China.

According to the US government, imports of aluminum extrusion products from China rose 90 percent from 2007 to 2009, and in 2009 alone imports were valued at an estimated $514 million.

Zhongwang will also seek growth domestically to raise its market share to 70 percent from 55 percent in the next two years, Lu said.

China is the world's largest consumer of aluminum extrusion products, with a growth rate of 25 percent year-on-year.

Zhongwang's gross profits generated from industrial aluminum extrusion products accounted for 99.6 percent of the company's total.

The company withdrew from the construction aluminum product market and focused on industrial aluminum extrusion products as they are more profitable due to higher value addition.(China Org.cn)