In 2021, in the face of the global challenge of the new crown pneumonia epidemic, the Chinese government has taken active and effective measures to control the spread of the epidemic through early detection of the source of infection and rapid response, which has achieved good epidemic control results. In addition, the effective vaccination of the new crown vaccine has formed a better barrier for epidemic prevention and control. With the joint efforts of the Chinese people, production and life have returned to normal.
In the first half of 2021, China’s GDP was 53,216.7 billion yuan, an increase of 12.7% year-on-year at comparable prices, 18.3% year-on-year in the first quarter, and 7.9% in the second quarter. Some institutions predict that China’s GDP growth in 2021 will exceed 8%. Statistics also show that from January to November, the added value of China’s industrial enterprises above designated size increased by 10.1% year-on-year. Manufacturing grew by 10.4% compared to the same period in 2020. Figure 1 shows the year-on-year growth rate of industrial added value above designated size.
Figure 1 Changes in the added value of industries above designated size in mainland China
The recovery of the economy has created a good condition for the expansion of investment casting production and market demand in China. According to industry surveys, it is estimated that the investment casting output value of mainland China in 2021 will reach 3.318 billion US dollars, an increase of 17.5% compared with 2020. A new peak in output value in the past 5 years. The following is an analysis of the market situation according to different fields.
(1) High value-added castings
High value-added castings are mainly used in high-end manufacturing fields represented by aerospace and industrial gas turbines (Figure 2). The growth of high value-added castings in mainland China is mainly due to the rapid development of the aviation industry. China has its own complete military aircraft manufacturing system. In order to meet the needs of national defense, the demand for military aircraft will continue to grow.
Figure 2 High value-added castings
In terms of civil aircraft, as the world’s most populous country, with the continuous improvement of people’s living standards and economic prosperity, the demand for civil aircraft is still an important part of the global aviation market, and it is also a guarantee for the growth of the global high value-added investment casting market. Key factor.
Boeing’s latest 2021 China “Civil Aviation Market Outlook” believes that China will quickly get out of the epidemic and the growth of low-cost airlines and e-commerce will drive future aircraft demand, thus raising the forecast for China’s aircraft demand in the next 20 years. . It thinks China’s aviation industry will need 8,700 new planes by 2040, 1.2% higher than its forecast of 8,600 planes last year.
At present, most of China’s civil aircraft still come from imports (Figure 3), but its own civil aircraft manufacturing system is also being perfected. The impact of the epidemic on the actual demand for aircraft is significant. According to statistics, the number of civil aviation passenger aircraft introduced by China Airlines in 2020 is only 133, less than 1/3 of that in 2018. But the good news is that after the toughest period, demand is picking up, reaching 168 in 2021. On December 2, the Civil Aviation Administration of China issued an airworthiness directive for the Boeing 737MAX, making it possible for the aircraft to return to service in China.
Figure 3 The number of civil aviation passenger aircraft introduced in mainland China in the past five years
At present, according to statistics, the output value of high value-added castings in mainland China is 804 million US dollars, an increase of 15% compared with 2020. The momentum of growth in 2022 will not change.
(2) Automobile castings
Since 2020, the development of the global auto market has fallen into a trough due to the double “bad” effects of the ongoing COVID-19 epidemic and the shortage of on-board chip supply. The Chinese auto industry has overcome a series of difficulties and made progress. According to the latest data released by the China Association of Automobile Manufacturers, my country’s automobile production and sales will reach 26.1 million in 2021, a year-on-year increase of 3.1%, ending three consecutive years of negative growth. In 2022, China’s automobile production and sales are expected to reach 27.5 million. Figure 4 shows automobile castings, and Figure 5 shows the changes in automobile production in mainland China in 2021.
Figure 5 Changes in automobile production in mainland China in 2021
China’s precision casting of automobile castings is aimed at both international and domestic markets. Taken together, the output value in 2021 will be 347 million US dollars, an increase of 4.2% over 2020.
An important change is taking place in China’s auto industry, with the rapid increase in the production of new energy vehicles. According to statistics, in the first 11 months of 2021, the cumulative sales of new energy vehicles are close to 3 million, and the annual sales are expected to reach 3.4 million, a year-on-year increase of 1.6 times.
In order to cope with the challenge of global climate change, the Chinese government has clarified the action plan, and proposed that carbon dioxide emissions should peak by 2030, and strive to achieve the strategic goal of achieving carbon neutrality by 2060. Automobiles are an important area related to it. On October 27, the Society of Automotive Engineers of China released the “Technical Roadmap 2.0 for Energy Saving and New Energy Vehicles”, pointing out that by 2025, China’s new energy vehicles will account for about 20% of total vehicle sales. In 2030, the proportion of new energy vehicles in total sales will increase to about 40%. In 2035, new energy vehicles will become the mainstream of China’s auto market.
The increase in the share of new energy vehicles will change the structure of the automotive casting market, and the related impact deserves attention.
(3) General commercial castings
Mainland China is an important producer of general commercial castings in the world (Figure 6). It has formed a complete production and trading system, providing a large number of high-quality castings to the world. In 2021, with the joint growth of export orders and domestic orders, some downstream users are worried about the further rise of materials under the trend of rising raw materials, so they increase the inventory, so most precision casting companies are in full production. The situation changes slightly after October 2021. Overall, the output value of general commercial castings will reach US$2.17 billion in 2021, an increase of 21% over 2020. Figure 7 shows the changes in investment casting output value in mainland China in the past five years, and Figure 8 shows the distribution of investment casting output value in mainland China in 2021.
From the overall situation, 2021 is a turning point for China’s precision casting industry to gradually recover and develop after the epidemic. With the recovery of the international and domestic economy, the market demand is showing rapid growth. Growth in domestic demand is greater than that in exports, and this situation will continue. Since the increase in raw material prices cannot all be transferred to downstream enterprises, the gross profit margin cannot increase simultaneously with the increase in sales. The lack of skilled workers and technicians is still the main factor restricting the development of enterprises.