Japan aluminum extruder eying China auto market

Platts reported that Japan's largest aluminium rolling mill Furukawa Sky is seeking entry to China's growing automotive market by acquiring Chinese aluminium semis manufacturers.

On July 7th, Furukawa Sky signed a MoU with a Japanese trading house Mitsui & Company and China's Guangdong Dong Yangguang Aluminium, to acquire stakes of 2 aluminium semi makers owned by the Chinese firm.

The agreement said that Guangdong Dong Yangguang Aluminium will sell up to 45% stakes of Ruyuan Dong Yangguang Jingbo and Shaoguan-shi Yangzhiruang Aluminum Foil to Furukawa and Mitsui.

The 2 Chinese companies are manufacturers of aluminium sheet and foil products for electronics applications, based in the Shaoguan City. Both have track records of selling up to 20,000 tonnes per year of aluminium products each. The two semis makers have major shares in the aluminium foil, fins and condenser market in China, although their combined output capacities are less than one-tenth of Asia Aluminum, China's largest semi fabricated aluminium products maker.

Mr Shigeru Ueda spokesman for Furukawa Sky said that the parties are discussing how Furukawa and Mitsui would split the 45% stakes before concluding an official agreement with the Chinese firm. This partnership is a milestone for Furukawa that aims entry into China's automotive components market.

Mr Ueda said that Furukawa Sky will provide to the two firms technologies to make aluminium sheets for automotive heat exchangers.

He said that China in June produced more than 1 million automobiles which is twice of Japan's May production of 540,000 vehicles. China's automotive market is twice as large as that of Japan and promises strong growth.

Japan's Sumitomo Trust Bank said that China overwhelms the world with its large capacity over 8 million tones per year for semi fabricated rolled products which is around 3 times as large as that of Japan. But most of China's rolling equipment requires a revamp.

The reported said that "Quality of products for automotive and other transport equipment needs to be developed. Modern sheet processing facilities started operation in China only in 2005 and a large share of China's facilities require upgrades. The country's technology needs to be more competitive, in terms of efficiency and quality of final products."