Recent aluminum supply news remains inundated with the Zhongwang Holdings controversy. Many remember the case from 2019 when US prosecutors accused six southern California companies of evading aluminum import duties. The organizations had ties to Zhongwang Holding’s owner Liu Zhongtian and the skipped duties came to $1.8 billion total.
For anyone familiar with the 2019 shenanigans, the move outlines how some of China’s private sector corporations operate. A company with a market cap of $3.8 billion having its 252 subsidiaries and affiliates officially declared bankrupt by a court in Shenyang? It’s quite the decision. On top of that, the company boasts eye-watering debts of up to $64 billion. It’s like the economic equivalent of the “wild west.
Meanwhile, the acquisition of a high-quality German aluminum tube extruder, Aluminumwerk Unna, made more sense. At the very least, it provided the advantage of nominal vertical integration. However, China’s export tax on billets meant Zhongwang could never profitably supply its acquisition with raw materials. As a result, Una was always going to be a stand-alone subsidiary.
Through interviews with local traders, MetalMiner learned that parts of the group would likely suffer takeovers. In most cases, this will come from state enterprises with deep, state-financed pockets and a vested interest in maintaining market stability.Zhongwang remains, at least in capacity terms, Asia’s largest manufacturer of aluminum extrusions. And while the domestic market is softening, having the group’s mill shut down would leave a sizable hole in the domestic aluminum supply.