High-temperature alloy industry in-depth report: market space, competitive landscape profitability

I. Basic introduction: excellent performance, high-end equipment as the main application market

(A) performance: hot end parts application materials, different types of alloy process maturity there are differences

High-temperature alloy refers to a class of metal materials that can work for a long time at a high temperature above 600℃ and under certain stress. Generally speaking, high-temperature alloy refers to a class of metal materials that can work for a long time at high temperatures above 600℃ and under certain stresses by adding a large number of reinforcing elements based on the elements of the Ⅷth main group (iron, cobalt and nickel). From the performance point of view, high-temperature alloy has high high-temperature strength, good oxidation resistance, thermal corrosion resistance, fatigue resistance and other excellent properties, in the high-temperature alloy has a good organizational stability and reliability, so it is also known as heat-strengthened alloys, superalloys and so on.

High-temperature alloys can be divided into three categories: deformed, cast and powder. According to the alloy material molding method, high temperature alloys can be divided into deformed high temperature alloys, casting high temperature alloys and powder metallurgy three categories. Deformation of the alloy can produce rods, wires, plates, tubes and strips, etc., casting high temperature alloys such as axial crystal casting, fixed solidification and single crystal casting, powder metallurgy alloys have ordinary powder and oxide dispersion strengthened powder, and so on. In the naming method, the international high temperature alloy grade according to the development of the manufacturer's registered trademark; China's deformation of high-temperature alloy grades to GH followed by 4 Arabic numerals (the first bit of the classification number, 2 to 4 bits of the alloy number), casting high-temperature alloys using the K prefix (the first bit of the classification number), powder high-temperature alloys to FGH prefix followed by the Arabic numerals to indicate that the alloys such as MGH, DK and DD as a prefix to MGH, DK and DD. Powder high temperature alloys are indicated by FGH prefix followed by Arabic numerals, and alloys prefixed with MGH, DK and DD are indicated by mechanically alloyed powder high temperature alloys, fixed solidification high temperature alloys and single-crystal casting high temperature alloys.

The development of different process routes depends on the industry's balance between performance and cost. Take the emergence of cast and powdered high temperature alloys as an example.

(1) The downstream working temperature and strength increase pulls the alloy composition change, making it difficult to use the heat processing technology used in deformation of high temperature alloys, which in turn pulls the upstream research and development of casting high temperature alloys that can be used directly in the cast state. With the working temperature and strength of high temperature alloys continue to improve and comprehensive performance improvement, the alloy strengthening element content continues to increase, the composition is more and more complex, hot working performance has become very poor, a lot of high-performance nickel-based high-temperature alloys have been unable to hot working deformation, can only be used in the cast state. Cast high-temperature alloy no longer consider forging deformation performance, can be cast through the precision casting method or directional solidification process casting complex shape and have the usual cavity of the hollow thin-walled blades without margin. And because of the cast high-temperature alloy elements to be significantly higher than the total amount of deformation of high-temperature alloys, such as solid solution strengthening elements added Re, Ru, refractory metal element W content (some alloys more than 10%), so that the cast high-temperature alloys of long-lasting strength, tensile strength are significantly higher than the deformation of high-temperature alloys. And in accordance with the different solidification methods, traction isometric crystal casting, directional solidification column crystal and single crystal R & D came out one after another.

(2) Alloy composition changes make it difficult to deform by hot processing, and casting organization segregation makes the performance fluctuations, traction powder metallurgy process to produce high temperature alloys to overcome the above difficulties. Due to the cast state organization segregation serious lead to the microstructure of the uneven and mechanical properties of the fluctuations, so the industry began to use powder metallurgy process to produce high temperature alloys to overcome the above shortcomings. 1971 Pratt & Whitney will be the United States of America nickel-based casting high-temperature alloys at the time of the IN100 made of pre-alloyed powders, isothermal forging process to make the F-100 fighter engine parts, in 1972, equipped with F-15 and F-16 to replace the original on the F-16. In 1972, it was equipped on F-15 and F-16 to replace the original Wapsaloy deformed high-temperature alloy, and the weight of each engine was reduced by 58.5kg, and the cost was reduced by 15%. In addition, powder high-temperature alloys to save raw materials, reduce costs, the use of powder metallurgy hot isostatic pressing and forging method to produce prefabricated billets, compared with the traditional process can save 2/3 of the weight of the alloy raw materials, reduce costs by 12%.

(ii) Industry chain: nickel and other raw materials, in the upstream link, there are downward vertical development trend

High-temperature alloy industry chain upstream for the metal raw materials, and due to nickel-based high-temperature alloys use a large amount of upstream to electrolytic nickel as raw materials. From the size of the procurement volume is mainly nickel, cobalt, molybdenum, rhenium and other metal raw materials. According to the prospectus of TUNAN shares, for nickel-based high-temperature alloy, its main raw material is electrolytic nickel, which belongs to the national strategic materials, China's main manufacturers for Jinchuan Group Limited (or its authorized dealers) and a few other companies, basically take the spot mode of cash transactions, the price of the obvious volatility, the purchase price of the market price according to market conditions.

High-temperature alloy production enterprises are in the middle and upper reaches of the industry chain, and the core lies in the process control to realize the melting of metal raw materials into high-temperature alloys with high purity, homogeneity of composition and good consistency of organization. Combined with advanced manufacturing and testing equipment, the enterprises will produce high-temperature alloy products with excellent performance demanded by downstream customers according to a certain ratio of matrix elements and production process, including casting high-temperature alloy master alloy, deformed high-temperature alloy, powder high-temperature alloy, etc. The shape of the products varies according to the downstream demand, equipment capacity and technological level, including rods, tubes, wires, etc. The enterprises are in the middle and upper part of the industry chain.

High-temperature alloy product certification standards are more stringent, and require multi-step certification to be included in the customer's qualified supplier catalog. According to the prospectus of Lunda, products into the supply chain of high-end equipment, design institutes, host plants, direct customers (mostly forging and casting plants) and other units, the whole process of participating in the key important parts used in high temperature alloys qualified supplier assessment and evaluation process, non-critical important parts of the high temperature alloys used in the evaluation process will be simplified.

(iii) Value split: alloy and forging and casting are the main value-added products, while price fluctuations of metal materials affect profitability.

Electrolytic nickel, nickel metal and other metal materials for high-temperature alloy manufacturers, one of the main raw materials, the current aero-engine field with a large amount of GH4169 chemical composition (mass fraction, %), nickel accounted for more than 40%, in such deformation and casting of high-temperature alloys such as GH4738, GH4698, K417, K419, etc., the nickel mass fraction of more than 50% or even higher. Tunnan shares, for example, electrolytic nickel for the company's direct materials in 2017-2019, the first largest composition, accounting for 46.80%, 46.89% and 41.07% of the company's direct materials during the reporting period.

For casting high-temperature alloy master alloy products, direct materials are the main component of operating costs, and nickel constitutes the main cost. Tuanan shares casting high temperature alloy master alloy during 2016~2018 direct materials accounted for about more than 80% of the proportion of operating costs, and the proportion of 2018 and 2019H1 was even as high as about 90%. Ronda shares 2017-2020 high-temperature alloy to cast high-temperature alloy master alloy (its deformation of high-temperature alloy production line will only be put into production at the end of 2020), direct materials accounted for more than 80% of the proportion of operating costs during the period of 2018-2020. Nickel metal as the main raw material of high temperature alloy master alloy. In 1972, it was equipped on F-15 and F-16 to replace the original Wapsaloy deformed high-temperature alloy, and the weight of each engine was reduced by 58.5kg, and the cost was reduced by 15%. In addition, powder high-temperature alloys to save raw materials, reduce costs, the use of powder metallurgy hot isostatic pressing and forging method to produce prefabricated billets, compared with the traditional process can save 2/3 of the weight of the alloy raw materials, reduce costs by 12%.

(ii) Industry chain: nickel and other raw materials, in the upstream link, there are downward vertical development trend High-temperature alloy industry chain upstream for the metal raw materials, and due to nickel-based high-temperature alloys use a large amount of upstream to electrolytic nickel as raw materials. From the size of the procurement volume is mainly nickel, cobalt, molybdenum, rhenium and other metal raw materials.

According to the prospectus of TUNAN shares, for nickel-based high-temperature alloy, its main raw material is electrolytic nickel, which belongs to the national strategic materials, China's main manufacturers for Jinchuan Group Limited (or its authorized dealers) and a few other companies, basically take the spot mode of cash transactions, the price of the obvious volatility, the purchase price of the market price according to market conditions. High-temperature alloy production enterprises are in the middle and upper reaches of the industry chain, and the core lies in the process control to realize the melting of metal raw materials into high-temperature alloys with high purity, homogeneity of composition and good consistency of organization.

Combined with advanced manufacturing and testing equipment, the enterprises will produce high-temperature alloy products with excellent performance demanded by downstream customers according to a certain ratio of matrix elements and production process, including casting high-temperature alloy master alloy, deformed high-temperature alloy, powder high-temperature alloy, etc. The shape of the products varies according to the downstream demand, equipment capacity and technological level, including rods, tubes, wires, etc. The enterprises are in the middle and upper part of the industry chain.

As for deformed high-temperature alloy products, direct materials are the main component of operating costs. Fushun Special Steel's disclosure of fuel and power costs, depreciation, and manufacturing costs are unified into the category of manufacturing costs, Fushun Special Steel's 2018-2021 high-temperature alloy direct materials accounted for more than 85% of the proportion of operating costs, which is the highest part of the three major components of operating costs. Aerospace technology's main products for aviation hard to deform metal materials ring forgings, deformation of high temperature alloy for its two major raw materials. 2018-2020, the proportion of raw material costs in the operating costs of Aerospace technology were 71.54%, 76.32% and 80.60%, direct material costs in the cost of operating costs year on year, mainly due to the scale of the benefits of the emergence of the unit after the direct labor, It is mainly due to the decrease of direct labor and manufacturing cost per unit after the scale benefit is realized, and the increase of raw material purchase price.

From the distribution of value-added industrial chain links, the value of deformed high-temperature alloy production and forgings is close to the value of the link. Taking HangYu Technology as an example, we assume that the unit value of electrolytic nickel, the upstream raw material, is 1. Based on the average value of the main financial indicators of HangYu Technology in the three reporting periods from 2018 to 2020, the value generated by the forging link is slightly higher than that of the deformed high-temperature alloy production link, and the value-added in this link (referred to as the gross profit amount and assuming that the deformed alloy is purchased from outsourcing) is 2.6 times of that of the upstream raw material electrolytic nickel, which is lower than that of the casting high-temperature alloy master alloy precision alloy production link. Lower than the casting of high-temperature alloy master alloy precision casting link to bring value-added.

For the deformation of high-temperature alloy products, cost fluctuations, considering nickel as the main raw material, assuming that the proportion of other cost items and sales prices remain unchanged, based on the above assumptions, the value of the nickel unit rose by 10%, Fushun Special Steel 2020 high-temperature alloy products gross profit margins or a decline of 2%.

Second, the market space: the stability of the long cycle, the growth of the aftermarket

(A) global scale: the global high-temperature alloy market is expected to be 9.2 billion U.S. dollars by 2027

The global high-temperature alloy market size is expected to be $9.2 billion by 2027, and the 2020-2027 CAGR is expected to be 8.7%. According to Allied Market Research, the global high temperature alloys market size was USD 6.2 billion in 2019 and is expected to reach approximately USD 9.2 billion by 2027. The market is expected to grow at a CAGR of 8.7% from 2020 to 2027. Regionally, North America dominated the market share in 2019. Meanwhile, Asia Pacific is expected to grow at a faster rate due to growing demand from emerging economies such as China for aerospace and other applications. In terms of downstream applications, the share of aerospace industry is high due to the various applications of high temperature alloys in turbine blades, turbine disks, aero-engines and landing gears.

At present, some products such as deformed high-temperature alloys in China still have certain space for domestic substitution. Referring to the “Reply to the Environmental Impact Report on the Industrialization Project of High Performance Metal Materials for Aerospace Industry of Western Superconducting Material Technology Co. 1500 tons.

(B) market segments: equipment modernization and construction and domestic substitution of growth, civil applications can be expected

1. Application field one: aerospace engine is the main application market, with high added value, large dosage and other characteristics.

High-temperature alloy manufacturing hot end parts is the source of aviation engine thrust, medium and long term technical substitutability is weak. Take aero-engine as an example, the thrust mainly comes from the reaction force of high-pressure and high-heat airflow at the hot-end parts, and the cold-end parts mainly play the role of air intake, do not carry out high-power work on the airflow, so the cold-end working environment is milder, in which titanium alloy is widely used in the manufacture of cold-end parts due to its lighter quality. However, the working environment of the hot-end components is more severe due to the need to perform high-pressure and high-heat work on the airflow to generate thrust, and general materials and ordinary titanium alloys are unable to meet their performance requirements. The overall working environment of the hot end components follows the direction of the airflow from the pressurizer to the back, and reaches the worst working environment in the combustion chamber.

For example, according to the prospectus of Lunda, for aero-engine parts, the turbine speed of medium and large turbofan engines can reach 15,000r/min, and the temperature in front of the turbine can reach more than 1,700°C. Under the premise of the same level of design of aero-engine turbines and fans, the thrust increases by 15% for every increase of 100°C in the temperature in front of the turbine, and the high-temperature alloys account for 40% to 60% of the total weight of the engine in the new type of aero-engine. In the new aero-engine, the amount of high temperature alloy accounts for more than 40%~60% of the total weight of the engine. Aerospace application scenarios require high material performance. In this context, in the aerospace field, high-temperature alloys are mainly used in the manufacture of engine turbine hot-end components, such as turbine disks, turbine guide vanes, combustion chambers and charge combustion chambers and other major components.

In the medium and long term, the growth of aero-engine market space for high-end equipment is more prominent. According to the 2020 annual report of Aero Control, the core supplier of China's aviation engine control system, with the goal of “basically realizing the modernization of the national defense and the army” proposed by the Fifth Plenary Session of the 19th CPC Central Committee in 2035, China's military planes will increase significantly in terms of the level and quantity of demand in the next few years. According to the investor communication made public by Aerospace Control on December 24, 2021, “The current demand growth in aviation power mainly includes:

① part of the second-generation aircraft upgrades, third-generation aircraft performance enhancement, related models of localized power replacement, replacement of existing engine life expiration; ② the deployment of advanced warplanes in neighboring countries on China's military pressure, China's high-performance three-and-a-half generation, the production of fourth-generation aircraft need to be appropriately enhanced; ③ new research models such as transport aircraft, bombers, new shipboard aircraft, etc., the demand for urgent, will continue to invest in scientific research funds; ④ with the training and training requirements on the frequency of use of equipment, combat, and the number of aircraft will be significantly increased. (iv) With the increase in the frequency of use and consumption of equipment as well as the maintenance of new planes, the maintenance business will increase as a result of the operationalization of training. Therefore, under the double-wheel drive of demand and new model technology, it is expected that the company's orders during the '14th Five-Year Plan' period will maintain the growth trend of the end of the '13th Five-Year Plan'.