China’s emergence as the world’s biggest aluminum maker has shaken up the industry, creating a surplus that forced competitors to close plants as profit fell. Alcoa Inc., an iconic U.S. producer for more than a century, has shuttered all but one smelter and plans to split itself in two. While some companies begin to show signs of stanching the red ink, there’s probably more disruption ahead.
After dominating the market for raw aluminum, China wants to expand its ability to make higher-value products with the commodity. The biggest step so far was the announcement last week that Chinese aluminum entrepreneur Liu Zhongtian will acquire Cleveland-based Aleris Corp. for $2.3 billion.
The deal gives the founder of China’s largest producer of extruded aluminum greater access to American and European technology, as well as buyers that include aerospace manufacturers like Boeing Co. and automakers such as Audi.
“This was a different kind of move by a Chinese company,” Yi Zhu, an analyst at Bloomberg Intelligence, said by phone from Hong Kong on Aug. 31.
“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.”
Liu’s move follows decades of sweeping changes in the industry. When he founded China Zhongwang Holdings Ltd. in 1993, the country accounted for less than 10 percent of global production of primary aluminum, the basic product churned out by smelters.
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