SIGMA Group focusing on automotive manufacturers in China
Previously, Shanghai Sigma’s offered prices had been used as a benchmark for the imported aluminum alloy ingot from China to Japan. But, currently, the offered prices from the manufacturers such as Delta, Ye Chiu and Chinalco have been used as a benchmark, instead.
Sigma has sharply reduced its product share in Japan in recent years.
The signs have been seen since around 2012. According to Chinese statistics, the exporting volume for June 2012 indicates that Ye Chiu exported 14,226 tons. Sigma and Delta followed it exporting 7,320 tons and 5,401 tons respectively.
Also, as to the imported aluminum scrap during the same period, Ye Chiu was on top at importing 25,953 tons, which was followed by Sigma with 15,117 tons and Delta with 15,043 tons.
Having a license of processing trade at that time, Sigma had imported a significant amount of scrap and kept the volume of its exported alloy at a certain level. But, as Shanghai Sigma’s import license was not updated in early 2014, its scrap import and alloy export have decreased.
According to the ranking of Chinese aluminum alloy exporters released in March 2015, the top exporter was Ye Chiu with 9,854 tons and the second was Delta with 9,251 tons. Sigma (Zhangzhou Sigma Metals) ranked fifth with 3,224 tons.
At the moment, Japan is estimated to purchase 2,000-3,000 tons ADC12 per month from Sigma, which means drops by about 70% compared to 2010. It is clear that Ye Chiu and Delta have replaced Sigma which had a overwhelming share in the imported aluminum alloy market in Japan.
80% Sigma’s production is bound for Chinese domestic market
Sigma will close its Shanghai plant within this year due to a major environment problem in Shanghai area and build a new plant (Zhejian Sigma) in the Jiashan Economic and Technological Development Zone in Zhejian Province. The company plans to start operation next spring. Zhejian Sigma will have 300,000t/m of aluminum alloy production capacity and the company will relocate the facility in Shanghai plant there. Shanghai plant is still continuing production as the work of relocation has been delayed.
Currently, Zhangzhou Sigma Metals in Zhangzhou in Fujian Province is in charge of exporting. If the Zhejian plant starts operation, Sigma would have 1.2mn tons of production capacity per year. Sources says that 80% of Sigma’s production is consumed in Chinese domestic market and the company has reduced its export ratio intentionally due to prices.
“Previously, QCD (Quality, Cost and Delivery) was required for exporting to Japan. But, now, only CCC (Cost, Cost and Cost) is required. More demand for quality has been requested in Chinese market as previous Japanese market did. In terms of prices, it would be favorable for us to sell more products in domestic market than exporting overseas,” a source from Sigma said.
Chinese major manufacturers currently offer ADC12 at $1,600/t
Sigma offers the same price for exporting as that for Chinese domestic market. ADC12 is offered by Sigma at $1,740 (FOB China), which is more than $100 dollars higher than that offered by other ADC12 suppliers exporting for Japan. The mainstream alloy manufacturers’ offered prices for Japan are around $1,600-1,620/t (FOB China).
Sigma could be the only supplier of hot aluminum in China. The company has increased the supply of hot aluminum as its alloy sales have increased in Chinese automotive manufacturers. As Sigma considers it right to sell its products only when the QCD is satisfied, it never joins a price competition which could exhaust itself.
It’s not known if the business policy might have a positive effect or not in future.
However, in Guandong province where there is a large concentration of aluminum alloy manufacturers, small and medium sized alloy manufacturers producing cheap off-grade ADC12 and base metals have gone into bankrupt and closed business one after another. After the sorting staff of Zorba, raw materials for aluminum alloy, has left the city, laid-off scrap sorting contractors have increased rapidly instead.
In a sense, as Sigma remarks, demand for lower grade aluminum alloy has relatively dropped as more Chinese automotive manufacturers have become quality-oriented. And, differentiation has become a thing of the past. As a result, they have been shaken out.
On the other hand, the current situation reflects the week Chinese economy.
（Edited by Sasaki）