SMM Analysis: With The Gradual Release Of New Capacity, The Chinese Aluminum Plate/Sheet, Strip And Foil Industry May Be Reshuffled

SHANGHAI, Jan 4 (SMM) -According to SMM statistics, there are currently about 25 aluminum plate/sheet, strip and foil projects under construction in China, with a total designed production capacity of 4.032 million mt. They will be put into production gradually before 2025.

From the second half of 2020 to 2021, the aluminum plate, strip and foil market has ushered in unprecedented booming demand. With the rapid development of NEV, battery foil has also become a star product that has attracted much attention in the aluminum processing industry. Therefore, many aluminum plate, strip and foil enterprises are actively expanding their production, and a large number of new projects have sprung up, of which about 1.092 million mt are related to battery foil. Driven by multiple new projects, China's battery foil production capacity has increased rapidly.

However, since the second quarter of 2022, due to the global economic downturn, overseas markets' reliance on China has decreased. This, coupled with massively commissioned new projects in China, has shifted the aluminum plate, strip and foil market into an oversupply. At present, many companies said that they are unable to produce at full capacity due to insufficient orders, and profit margins are increasingly narrowing due to oversupply.

SMM believes that it is unlikely to see turnaround in short-term global demand for aluminum sheet, strip and foil. Even if some new projects are delayed, it will be difficult to shift the trend of continued expansion of aluminum sheet, strip and foil production capacity in the next two years. Over the next few years, the aluminum plate, strip and foil industry will experience oversupply and meager profits, and may usher in a new round of industry reshuffle. Prudent investment and avoiding price competition are the best solutions for many aluminum plate, strip and foil companies to push the entire industry out of the predicament as soon as possible.