Affected by the economic downturn and the continued downturn in the automobile sales market, the investment in China alloy wheel rim project has finally bid farewell to the noise and returned to rationality compared with previous years. Judging from public reports by the media, in 2019, China’s aluminum (magnesium) alloy wheel “newly built” and “planned” totaled 11 projects, which is a 40% reduction from the 18 projects in 2018; “planned” and “under construction”. "The total production capacity is 53.2 million, which is slightly "rebound" compared with last year in terms of figures.
The following is a summary of the new capacity information of China's aluminum (magnesium) alloy wheel industry in 2019 that we have collected from public channels:
First of all, as usual, we need to borrow a few sentences from last year's "Review" series to explain the above data again, so as to avoid readers who read our "Review" series for the first time on our data collection channels and the basis for data analysis. Doubts arise, and at the same time, it is convenient for friends to adjust their thinking and discuss this issue with us from the same perspective: "The data and information we release here are all derived from public reports by public media. Although we already know some new project information, it is not To avoid infringement, this part of the information is not listed in the above table for statistics. We will add it in the follow-up'review' report after the information is disclosed in the future. Because we are doing trend analysis, and the data collection method and sampling The scopes are kept the same, so although the data is somewhat deviated from the real situation, the trend results obtained by the comparative analysis method will not be greatly affected by the accuracy of the absolute numbers, so the approximate trend should be accurate."
Now we will start to make a simple review and analysis of the situation of the entire industry last year and the future direction.
From the above data, we can see that the newly added project "planned" capacity in 2019 has slightly increased compared to the data in 2018, but from the actual situation last year and combined with previous data, the overall trend of "expansion" is actually Up or down. The reasons for the decline were analyzed in detail in last year's "Review" article, so I won't repeat them this year.
A notable feature of the new projects in 2019 is that most of the “new” production capacity is the capacity expansion of existing aluminum (magnesium) alloy wheel manufacturers or the expansion of projects in different places. This part of the “planned” capacity accounts for To 65% of the total, that is to say, 65% of the newly "planned" production capacity last year is supported by technology and market.
Since 2018, the existing wheel factory expansion and increased production capacity accounted for the proportion of the annual new production capacity began to rise sharply. The proportion of new projects that purely follow the trend of cross-industry investment is gradually decreasing, which shows that the investment in the entire industry is gradually returning to rationality. At the same time, industry production capacity is gradually being concentrated.
As we all know, technology and market are the lifeblood of an enterprise, especially the wheel industry. According to the current product price and manufacturing technology level, if there is no certain technical precipitation and management experience accumulation, investors who come across banks want to do it in the early stage of project production. It is almost impossible for the cash flow to be positive; similarly, due to the high price of aluminum (magnesium) alloy raw materials and large occupation of liquidity, if there is no stable market, it is impossible to guarantee the efficient turnover of liquidity. Therefore, from the perspective of investment risk, the risk of new projects invested in cross-industry is much higher than that of new projects in existing wheel factories, and the annual increase in the proportion of new production capacity of existing wheel factories shows that automotive aluminum alloy wheels Industry investment is becoming more rational.
China alloy wheel manufacturers encountered rare internal and external troubles since their inception in 2018. The number of product orders and the actual settlement price and settlement cycle were all affected to varying degrees, and the environment that affected the industry’s operating performance was not obvious in 2019. Improve, and even worsen. First of all, orders are tight. Those "chicken ribs" orders that were not favored in the past with long payment cycles and very low profit levels have also become the "sweet and pastry" chased by wheel manufacturers. For example, a certain "big boss" enterprise in the industry has disdain to get involved. The national brand car company's wheel orders were actually robbed by the "big brother" company last year. This shows the degree of hunger for the market by wheel companies. Secondly, some companies have problems with their capital supply. If we patiently search on the public enterprise information query platform, it is not difficult to find that many aluminum alloy wheel manufacturers added a lot of "distrust information" last year, and individual legal representatives have also been restricted from high consumption. , Some companies have unfortunately been included in the list of business abnormalities. However, under such "difficulties", the proportion of the existing wheel factory expansion projects in the annual "new" production capacity has increased year by year. This can only illustrate one problem, that is, as we predicted in the past. In that way, "the strong will always be strong", the production capacity of the wheel industry is gradually concentrated.
In addition, the new "planning" project added last year has another aspect worth mentioning, which is still an old topic about the magnesium alloy wheel project. The total production capacity of the new "planned" magnesium alloy wheels announced in 2019 is 18 million, accounting for 33.8% of the annual "planned" increase, and this proportion was only 8% in 2018! Regarding the current status of magnesium alloy wheels, we have detailed in the articles "Reviewing the slowdown in the investment growth rate of China's aluminum alloy wheel hub projects in 2018" and "Talking about the advantages and disadvantages of aluminum alloy and magnesium alloy wheel forging and casting processes". I have analyzed it, and I won’t repeat it here (readers who are interested in this issue can follow our public account alwheel to view related articles). We just want to remind investors that one export sales only more than 1,000 magnesium alloy wheels. It is difficult to support such a large-scale new capacity in the market as a news book and special book. It is still the old advice: making money is not easy, investment needs to be cautious! I sincerely hope that investors can make rational and scientific decisions.
Regarding some of the characteristics and trends that may appear in the wheel industry in the next period of time we put forward in our "review" article last year, its development has not exceeded our original prediction, especially the pace of overseas investment and expansion of local wheel companies is just as It is increasing and accelerating as we expected. We are in "Why China will become the world's largest manufacturer of aluminum alloy wheels, how to maintain this advantage? "In the article, we have analyzed in detail the reasons why China's aluminum alloy wheel manufacturing industry has grown bigger. One of them is that China has established a complete industrial chain that can provide all-round services for the wheel industry. Its existence ensures that China's aluminum alloy The cost of wheel products has an absolute competitive advantage on a global scale. So what is the reason why local companies can abandon this favorable condition and not go far to invest overseas? On the one hand, of course, it is to get rid of the blocking of anti-dumping and tariff protection in Europe, America and other inexplicable countries. On the other hand, it is also very likely to be caused by insufficient confidence in the domestic investment environment.
We made a rough statistics last year. Starting from the European Union in 2010, 10 economies in the world have had a history of "sanctions" on aluminum alloy wheel products originating in China. At present, the GDP of these 10 economies The sum has exceeded half of the global GDP. If the value of China's GDP is excluded, the ratio will reach 68.44% (calculated based on the GDP data released by each economy in 2017). Therefore, in order to avoid the risk of additional costs caused by current and future uncertain trade barriers, capable local wheel manufacturers can only move overseas. In addition, in recent years, China’s labor, energy, transportation, taxes and fees, environmental protection and other costs have risen across the board. It is self-evident that these problems have put pressure on the manufacturing industry. At the same time, there have been occasional problems in the public opinion in recent years. The noise that is too conducive to the development of private capital may be precisely these factors that have more or less impact on the confidence of domestic investors. But we don’t think we need to worry about the latter. We have to believe that "the general trend of the world is vast, and those who follow it will prosper, and those who go against it will perish." Society will always develop in the direction of progress.
With the ringing of the New Year’s bell, the 1920s of the 21st century kicked off in this way. What color of swans and rhinos will the wheel industry encounter in the next year?
First of all, the development of the industry will continue along the trajectory we have always predicted in the past and will not change. Secondly, economic operation has its own laws. After a long period of rapid development, my country's economy has reached an adjustment cycle. This adjustment will not be accomplished overnight. The impatient RRR cut at the beginning of the new year is enough to explain this problem. Although the just released national economic performance data for 2019 were unsurprisingly interpreted by most media as a gratifying situation, we should also see that the GDP growth rate last year has fallen to the lowest level in history since the 1990s. Therefore, the development of our wheel industry in the economic environment will of course be affected by this decisive internal factor. "Chunjiang plumbing duck prophet", practitioners in the wheel industry will naturally appreciate this warm and cold. Thirdly, there is another issue that we cannot take lightly on the Sino-US trade friction. Although the first phase of the agreement was signed on January 15th, we should realize that this is just a ceasefire in the trade war between the two sides and not a truce. The first phase of the agreement does not actually have any substantial effect on the export of our aluminum alloy wheel products to the United States. It is good, and there are many variables such as whether this agreement can be strictly observed and implemented, and the content and results of the second-phase agreement negotiations. Pure trade friction will always have a limit to the impact of the wheel industry, but the economic butterfly effect caused by this cannot be ignored. Wheels or closely related cars are consumer goods, and their market is supported by purchasing power. The shock caused by the imbalance of the general environment is unlikely to be spared for all commodities that require real money in exchange.
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