In its "2018-2022 China Superalloy Industry Investment Analysis and Prospects Forecast Report," Zhongtou Consultants stated that the Aerospace sector is the primary Application Fields for superalloys. Superalloy materials were initially developed for use in the Aerospace industry and subsequently gradually expanded into many other industrial sectors, including power generation, automotive, petroleum and petrochemicals, glass and construction materials. Among these, demand from the defense industry remains particularly dominant.

　　Next, we will estimate the demand for Superalloy in military aircraft engines.

　　The basic assumptions for the calculation are as follows: The average service life of an advanced aeroengine is approximately 3,000 hours; China's air force conducts about 200 or more flight hours of training each year on average, and each engine is equipped with a backup engine; the ratio of twin-engine to single-engine military aircraft—both existing and newly added—is 1:1; the weight of a single engine is 1.5 tons, with Superalloy accounting for 50% of the material used; and the average yield rate for Superalloy components is 30%.

　　According to a report by "World Air Forces," in 2016, China had 2,955 military aircraft, placing it third globally—behind the United States and Russia—in total numbers. Compared to 2011, China's military aircraft fleet increased by 357 units in 2016, yielding a compound annual growth rate of 2.75%. If this compound annual growth rate is maintained, it is estimated that China will add another 1,484 military aircraft over the next 15 years. Based on the basic assumption that the ratio of single-engine to twin-engine military aircraft remains at 1:1, both currently and newly added, China is expected to see an additional 8,886 military aircraft engines over the next 15 years, resulting in an increased demand for raw materials for superalloy totaling 22,215 tons.

　　Military advanced aircraft engines are the “heart” of cutting-edge fighter jets, and superalloy is a key raw material for these advanced aircraft engines. Due to the arms embargo and export controls imposed on China by the UK and the US—both leading powers in engine and superalloy technology—China can only import complete engines from countries such as Russia and Ukraine. All domestically produced superalloy components for aviation engines are manufactured domestically.

　　Therefore, we can estimate the import proportion of Superalloy for military aviation engines in China by calculating the ratio of domestically produced versus imported aviation engines. The aircraft models that China mainly needs to import engines from Russia are the third-generation fighter jets J-10 and H-6K. The J-10 is a single-engine medium-sized fighter equipped with the Russian-made AL-31F engine; the H-6K is a twin-engine tactical bomber powered by the Russian-made D-30KP-2 engine. According to statistics from the "World Air Forces Report 2017," from 2011 to 2016, the number of J-10 fighters in China increased from 200 to 273, and the number of H-6K bombers rose from 120 to 190. Consequently, from 2011 to 2016, China needed to purchase an additional 213 engines from abroad.

　　Data from the CITIC Securities Consultant’s “2018-2022 China Superalloy Industry Investment Analysis and Prospects Forecast Report” indicate that from 2011 to 2016, China’s fleet of military aircraft increased by 357 units. Assuming a ratio of 1:1 between single-engine and twin-engine aircraft, the total number of military engines increased by 537 units. Consequently, it is calculated that imported engines accounted for 39.66% of the total engine inventory, meaning that approximately 40% of China’s military aviation engine superalloys rely on imports, leaving ample room for growth in the import substitution market.