Aluminum is one of the most abundant elements on Earth, with characteristics such as light weight, high strength, easy processing, corrosion resistance, thermal conductivity, and 100% recyclability. It is one of the most widely used metal materials in industrial applications. It has been widely used in downstream terminal industries such as automation equipment, new energy, 3C products, liquid cooling and heat dissipation, robots, rail transportation, aviation, and military industry.
With the continuous increase in demand for aluminum materials in emerging fields such as new energy vehicles, AI computing centers, drones, and robots, the application prospects of industrial aluminum materials are broad with the promotion of "aluminum for copper, aluminum for wood, aluminum for steel, and aluminum for plastic".
1. Basic situation of aluminum industry
(1) Overview of Aluminum Industry
With the upgrading of technology and the development of society, the aluminum industry chain continues to extend from simple casting, extrusion, and rolling to precision machining (CNC machining and surface treatment), widely used in downstream terminal industries such as automation equipment, new energy, 3C products, liquid cooling and heat dissipation, robotics, rail transportation, aviation, and military.
In the aluminum industry chain:
① Aluminum ingot manufacturers: According to data from Sihan Research Institute, the aluminum ingot industry market in China is highly concentrated, with a total market share of 85% for CR10 in 2022, indicating a high degree of market concentration. Representative companies include Aluminum Corporation of China, China Hongqiao Group Co., Ltd., and Xinfa Group Co., Ltd;
② Aluminum manufacturers: According to data from Sihan Industry Research Institute, the number of aluminum production enterprises in China will exceed 3000 in 2022, with a certain degree of concentration but not high;
③ Service provider: In order to deliver aluminum materials to various end industries, there are numerous aluminum processing/distribution companies. Aluminum processing mainly involves rough machining, including cutting, slitting, and leveling;
④ Component manufacturers: Processing products are mainly used to produce various types of products, including automation equipment, structural components, molds, etc. The production process includes CNC machining (turning, milling, boring, pulling, planing, drilling, grinding, etc.), sheet metal processing, and surface treatment processing (drawing, sandblasting, oxidation, spraying, electroplating, etc.), and the market is highly dispersed;
④ Terminal applications mainly include downstream terminal industries such as automation equipment, new energy, 3C products, liquid cooling and heat dissipation, robots, rail transit, aviation, and military.
According to the United States Geological Survey (USGS), bauxite supply mainly comes from Australia, Guinea, and China, while electrolytic aluminum production capacity is mainly concentrated in China. In 2023, China's aluminum smelter production will account for about 60% of global aluminum smelter production. According to data released by the National Bureau of Statistics, China's electrolytic aluminum production increased from 35.8 million tons to 44.01 million tons from 2018 to 2024.
(2) Market size of China's aluminum industry
From 2018 to 2024, China's aluminum processing material production increased from 39.7 million tons to 49 million tons, with an average annual compound growth rate of 3.57%.
In the segmented market structure of China's aluminum processing materials industry in 2024, aluminum extrusion materials and aluminum plate strips account for 77.65%, of which aluminum extrusion materials account for 47.55% and aluminum plate strips account for 30.10%. During the reporting period, the company mainly sold customized aluminum plates.
2. Overview of downstream industry market development
This article mainly analyzes downstream terminal industries such as automation equipment, new energy, 3C products, liquid cooling and heat dissipation, robots, rail transit, aviation, and military. All types of aluminum parts processing belong to precision metal parts. According to data from Beizhesi Consulting, the size of China's precision parts market reached 219.873 billion yuan in 2022, and the estimated compound annual growth rate of the global precision parts market from 2022 to 2028 is 5.53%. The downstream terminals represent the industry demand situation as follows:
(1) Automation equipment
With the continuous maturity of industrial automation technology, the application scale of industrial automation equipment continues to expand, and the industrial automation market has made significant progress. In 2023, the scale of China's industrial automation market will reach 311.5 billion yuan. In the future, with the continuous promotion of the global Industry 4.0 era, the demand for industrial automation equipment in various application fields will further increase. It is expected that the industry market size will grow to 353.1 billion yuan by 2024. In the future, the expansion of the industrial automation market will drive the market demand for customized industrial materials.
(2) New energy
From 2020 to 2025, the sales volume of new energy vehicles in China is expected to increase from 1.37 million to 16.5 million, with an average annual compound growth rate of 64.49%.
(3) 3C products
From 2021 to 2024, China's mobile phone production will increase from 1.662 billion units to 1.67 billion units; In 2024, the production of microcomputer equipment in China will be 340 million units.
(4) Liquid cooled heat dissipation
With the acceleration of the construction process of AI large models and intelligent computing centers, the integration of liquid cooling technology and servers has become a key and essential requirement, effectively promoting the development of related industries. From 2022 to 2027, the market size of liquid cooled servers in China is expected to increase from 7.3 billion yuan to 43 billion yuan, with an average annual compound growth rate of 42.57%.
(5) Drones
From 2024 to 2030, the market size of consumer grade drones in China is expected to increase from 47 billion yuan to 120.8 billion yuan, with an average annual compound growth rate of 17.04%; From 2024 to 2030, the market size of industrial grade drones in China is expected to increase from 99.8 billion yuan to 281.8 billion yuan, with an average annual compound growth rate of 18.89%.
(6) Robot
Driven by the global wave of technology, the integration and upgrading of technologies such as artificial intelligence, big data, and the Internet of Things have continuously enriched the functions of robots, significantly improving product stability, operational efficiency, and intelligence level. Developed industrial countries such as Europe, the United States, Japan, and China have listed the robotics industry as a strategic priority. Through policy guidance, research and development investment, and industry chain collaboration, they promote technological breakthroughs and large-scale deployment, driving the sustained high-speed development of the global robotics industry and steadily increasing market size. In terms of humanoid robots, with the acceleration of scene penetration and cost reduction, the field of humanoid robots is ushering in a key turning point of technological breakthroughs and industrialization landing.
According to the prediction of GGII, the market size of humanoid robots in China is expected to reach 2.158 billion yuan in 2024 and nearly 38 billion yuan by 2030, with a compound annual growth rate of over 61% from 2024 to 2030. In terms of industrial robots, according to GGII statistics, the sales volume of industrial robots in China increased from 153100 units in 2019 to 316000 units in 2023, with an average annual compound growth rate of 19.86%.
3. Industry technical level and technical characteristics
(1) Industry technical level
In the industrial aluminum industry chain, downstream end-users are automation equipment manufacturers and product manufacturers. There are numerous users of industrial aluminum, with personalized demand models, small single demand, and fast delivery requirements. Upstream are industrial aluminum producers, with a large number of industrial aluminum producers and limited production models per unit, mainly focusing on mass production. There are significant mismatches between upstream and downstream parties in terms of delivery time, model specifications, minimum order quantity, and selection consultation. Due to the characteristics of the industrial chain, users of industrial aluminum materials have four common problems when purchasing industrial aluminum materials:
(1) Procurement: Users require materials of multiple categories, with small single batch sizes. Producers are generally single category or limited category, and procurement requires finding multiple suppliers. The procurement volume is small and inefficient, resulting in high procurement costs;
(2) Delivery time: It is difficult to manage delivery time by coordinating with multiple material suppliers; The response speed of small and medium-sized material suppliers to scattered orders is not timely, and their ability to fulfill orders is poor, which further compresses production and processing time;
(3) Processing: There are many processing steps, requiring a variety of equipment and complicated processes. The selection of processes and material quality have a significant impact on manufacturing costs;
(4) Quality: Material quality cannot be guaranteed, and many material quality issues can only be discovered through the final surface treatment process, resulting in high quality costs. Companies in the industry need to have rich one-stop supply capabilities for customized industrial materials, reduce comprehensive procurement costs, and improve the efficiency of the industrial chain operation.
(2) Industry technical characteristics
① Dispersed participants in the industrial chain
Upstream industrial aluminum producers are limited by factors such as technology, resources, and costs, and a single producer can only provide limited products; The downstream application fields are extensive and the application scenarios are diverse. In addition, there are a large number of small-scale aluminum processing/distribution companies in the industry, with relatively single product categories, lack of processing and production capabilities, or lack of after-sales service. The industry needs one-stop service providers as a bridge connecting upstream and downstream.
② The customer's procurement cycle has immediacy
Upstream aluminum manufacturers adopt large-scale production models with long production cycles to ensure product quality and production efficiency. Downstream manufacturers and customers usually require products to be delivered the next day.
③ Customer demand is dispersed, and procurement presents characteristics of fragmentation and customization
Customized industrial materials are widely used in downstream terminal industries such as automation equipment, new energy, 3C products, liquid cooling and heat dissipation, robots, rail transit, aviation, and military. Due to the high degree of differentiation in product types and processing techniques, downstream manufacturers have significant differences in raw material models and sizes, resulting in extremely dispersed customer demands, and their procurement presents characteristics such as fragmentation and customization.
④ There are multiple product types to meet the industrial production needs of different industries and scenarios
The custom industrial materials industry has the characteristics of extremely diverse product types and strong professionalism, among which there are 8 series of aluminum alloy grades, each of which contains dozens to hundreds of sub grades, widely used in downstream terminal industries such as automation equipment, new energy, 3C products, liquid cooling and heat dissipation, robotics, rail transportation, aviation, military industry, etc. How to choose materials that meet their own product needs has become a major challenge for industrial producers.
4. The development trend of industry technology
In the future, the customized industrial materials industry will deepen its integration with digitalization, information technology, and intelligent equipment while maintaining its traditional market advantages, promote industrial transformation and upgrading, improve the efficiency of the industrial chain operation, and achieve cost reduction and efficiency improvement.
(1) Fast delivery promotes' Just in Time 'production
With the continuous increase in customized production by downstream component manufacturers or automation equipment manufacturers, customers generally adopt a production driven mode centered on order demand (production by order, small batch, high-frequency). To match the customer's business model, customized industrial material suppliers must simultaneously achieve agile response. Customized industrial material suppliers that have formed a scale in the industry will shift towards the "Just in Time" model. Through predictive procurement and stocking, precise on-demand scheduling, and efficient distribution, they can effectively compress production and delivery cycles, ensure timely and accurate delivery of customized industrial materials within the customer's production window, and ultimately drive the industry chain to achieve efficient and flexible customized production and rapid delivery.
(2) Creating richer one-stop supply services
Due to the increasing degree of customized production by downstream component manufacturers or automation equipment manufacturers, customers' demands for categories, specifications, and other industrial materials procurement will become increasingly diverse and complex. In the future, customized industrial material suppliers will provide a more comprehensive range of industrial material products based on the industrial production needs of different industries and scenarios, accurately matching customers' specific requirements and providing customers with a one-stop procurement of rich products.
(3) The integration of informatization and industrialization empowers industry development
To cope with the high-frequency and continuous procurement mode of customers, customized industrial material suppliers that have formed a scale in the industry need to efficiently process massive order data. In the context of the deep integration of informatization and industrialization, information technology has deeply penetrated into key links of the entire business chain, such as material selection consulting, procurement, warehousing, production, logistics, after-sales, and business management. In the future, with the continuous expansion of enterprise scale, it will promote end-to-end coverage of enterprise information systems, accurately match segmented scenarios, systematically promote cost reduction and efficiency improvement, enhance delivery accuracy, and drive continuous transformation and upgrading of the industry.
(4) Intelligent equipment enhances automation level and upgrades
There are numerous categories of customized industrial materials, and production has the characteristics of small batches, high frequency, and multiple steps. Therefore, investing in intelligent equipment to achieve stable and efficient automated production is a necessary way to improve production efficiency, gain scale advantages, and enhance enterprise competitiveness. In this context, customized industrial material suppliers will continuously improve the automation level that runs through warehouse management, material transportation, and production processes, enhancing warehouse management efficiency, production efficiency, sorting efficiency, and warehouse site efficiency.
