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Zhongwang Bets on Aluminum Use in Automobiles to Drive Demand

Aug. 22 (Bloomberg) -- China Zhongwang Holdings Ltd., Asia’s largest maker of extruded aluminum products, said demand is increasing as carmakers use more of the lightweight metal in place of steel.

“Aluminum usage in cars has changed noticeably in the past year,” Executive Director Lu Changqing said in an interview in Hong Kong. “Growth will be driven by the transportation sector.”

Aluminum producers globally are betting regulation to cut carbon emissions and improve fuel efficiency in the U.S. and Europe will prompt carmakers to use more aluminum. Jaguar Land Rover plans to start selling its first all-aluminum Range Rover SUV next month, reducing the car’s weight by 39 percent, while Daimler AG’s Mercedes is using the metal for its 93,534-euro ($116,599) SL model.

China’s industrial aluminum extrusion market will expand at least 12 percent this year to 4 million metric tons, Lu said. Liaoning-based Zhongwang today announced first-half profit more than doubled after it shifted its focus to the domestic market.

China Zhongwang shares gained as much as 7.9 percent to HK$3.28 and traded at HK$3.23 as of 1:26 p.m. in Hong Kong. The shares have gained 21 percent this year, compared with an 8.2 percent increase in the benchmark Hang Seng index.

Net income climbed to 1.03 billion yuan ($162.1 million) in the six months ended June 30, according to a statement filed to the Hong Kong stock exchange. Revenue increased 61 percent to 6.88 billion yuan.

Alcoa Inc., the largest U.S. aluminum producer, reported last month second-quarter earnings that beat analysts’ estimates as carmakers bought more aluminum. Alcoa expects 2 percent to 7 percent growth in the automotive market in China this year, Chief Executive Officer Klaus Kleinfeld said July 10 on a conference call, according to a copy of the transcript.

To contact the reporter on this story: Michelle Yun in Hong Kong at myun11@bloomberg.net

To contact the editor responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net

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