Aluminum Price Forecast, September 2016: Major Acquisition by Chinese Entrepreneur

Source: Ronnie Chua/Adobe Stock
Source: Ronnie Chua/Adobe Stock

China disrupted the global aluminum market when it became the world’s biggest producer of the metal, creating a surplus that forced competitors to shutter as profits plummeted.

Now, China wants to expand its reach and make higher-value products with aluminum and took a big step toward doing so last week with the acquisition of Cleveland-based Aleris Corp.

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According to a report from Bloomberg, Chinese aluminum entrepreneur Liu Zhongtian acquired Aleris for $2.3 billion and gives him greater access to technology primarily enjoyed by the Western world, in addition to buyers that include aerospace manufacturer Boeing Co. and automakers like Audi.

“This was a different kind of move by a Chinese company,” Yi Zhu, analyst at Bloomberg Intelligence, told the news source. “Previously, China went after raw-material assets abroad, but this is about going to the downstream, and it fits with the Chinese government’s goals to upgrade manufacturing and the economy.”

China emerging as the world’s biggest producer of aluminum also spelled doom for Alcoa Inc., a longtime domestic producer for more than 100 years, which closed smelters in the United States.

Zhongtian Embroiled in U.S. Anti-Dumping Cases

Our own Jeff Yoders wrote on this acquisition last week and noted Zhongtian’s issues with the United States. “The cases against Zhongwang allege that the firm has been selling aluminum extrusions at below cost and that the Chinese entity receives state aid in the form of financing and other benefits giving it an unfair advantage. If Liu had a U.S. company, though, he could produce extrusions here and avoid the entire mess,” Yoders wrote.

MetalMiner’s aluminum prices provide accurate benchmarks for 3003-H14 sheet. They are based on a proprietary database of more than 31 million benchmarks collected from more than 1,100 companies operating in 19 industries.

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