Executive Interviews

Asian Metal: Mr. Shuai, thanks for taking the interview by Asian Metal. Please introduce your business briefly.

Mr. Shuai: Thanks for your invitation! It is a great honor to receive the interview by Asian Metal. Zhejiang Qixin Alloy Material Co. is a large joint-stock company integrating production, supply and sales of magnesium ingot in China. China Huarong Asset and Zheshang Bank are its two major shareholders. Qixin Alloy has three plants, including Inner Mongolia Jinshi Magnesium Co, Ningxia Sun Magnesium Co. and Xinjiang Jinsheng Magnesium Co. We focus on the production of magnesium ingot, magnesium alloy, ferrosilicon, coke, semi coke and chemical raw material. We have 2,400 employees and the output value could reach 5 billion yuan. With the annual production capacity for magnesium ingot of 80,000t, 95,000t of ferrosilicon, 1,110,000t of coke and 300,000t of semi coke, our company already became the largest magnesium ingot producer in China and also play a very important role in magnesium industry. We concern with the core field of magnesium ingot and magnesium alloy, and aim to change the traditional production process of magnesium industry and promote the large-scale and wide application of magnesium products. We expect to lead the rapid and healthy development of magnesium industry and deliver more lightweight magnesium and new alloy materials for the society.

Asian Metal: As the largest magnesium ingot plant in magnesium industry, how about your production state in Ningxia, Xinjiang and Inner Mongolia? What about differences of the production technology?

Mr. Shuai: Currently, the annual production capacity of Ningxia Sun Magnesium Co. could reaches about 35,000t, 25,000t in Inner Mongolia Magnesium and 20,000t in Xinjiang Jinsheng Magnesium. In order to break the bottleneck in magnesium industry and reach large-scale application of high-quality and lightweight magnesium, our company puts into lots of funds in the research of magnesium smelting process to realize the low cost, automation and high industrialization. We already built a circular economy industry chain of “dolomite-coal-semi coke-ferrosilicon-magnesium ingot-magnesium alloy”. Presently, Ningxia plant takes gas generator to produce magnesium ingot and the coal comes from Yulin city; Inner Mongolia plant uses waste gas from coke oven to produce the magnesium ingot and we also takes tar, crude benzene as by-products; Xinjiang plant uses carbocoal gas to produce magnesium ingot and magnesium alloy.

Asian Metal: Since 2021, Carbon Neutrality and Emission Peak Policy brought challenges in environmental production and security supervision to magnesium plants. Did your company also suffer the related challenge? How did you deal with it?

Mr. Shuai: Our company pays great attention to the safety and environmental protection. The three magnesium plants have invested 250 million yuan in safety, environmental protection and other aspects of continuous technical transformation, which reached the leading level in magnesium industry. In terms of pollution reduction and carbon decrease, we all realized the renovation and upgrading. The tail gas desulfurization has reduced by 91.25% and 80% respectively compared with the Emission Standards for Pollutants in the Magnesium and Titanium Industry. Comprehensive utilization of waste heat from reduction slag, comprehensive utilization of solid waste, disorganized governance and on-line monitoring equipment have been installed from the raw material calcination workshop to the reduction workshop and then to the refining workshop. The company achieved 24-hour monitoring of pollutant discharge from the source to the full coverage of the product. The company has basically realized harmless treatment of solid waste reduction residue, which is supplied to the surrounding cement plants as raw materials for production. Additionally, it is planned to complete the transformation of the closed coal silo and the closed storage of the slag yard in 2022, and carry out the closed storage on the basis of the original windproof and dust suppression network to reduce dust and other pollution.

Asian Metal: Because of the construction of Beijing-Kunming high-speed railway, the supply of dolomite in Wutai of Shanxi was restricted. Some Shaanxi magnesium ingot plants purchased the material from Ningxia, did the prices for dolomite in Ningxia increased? Additionally, how about your sources for dolomite in Xinjiang and Inner Mongolia? What about the quality?

Mr. Shuai: The issue you mentioned also reflects an important resource problem. The resource reserve advantage of the industry will become more prominent in the future. After Spring Festival holiday of 2022, the supply for dolomite tightened and the mainstream prices went up from RMB110/t (USD16/t) delivered to the present RMB230/t (USD34/t) delivered, and the production cost in Shaanxi increased obviously. Our company pays great attention to resource reserves from the perspective of strategic development at the beginning. Our three factories are distributed in Ningxia, Inner Mongolia and Xinjiang, and the related mineral resources are very rich. Our Ningxia plant has Ningxia Ruixin Mining, which is located in Qinglongshan, Ningxia and is the only local mining unit at present. The mine is 20km away from Sun Magnesium Industry. Inner Mongolia Jinshi’s dolomite is in Zuoqi Yuandong and the mine in Xinjiang is located near Xingxingxia Town, Hami City. The above mines are of good quality and can be self-sufficient. We won’t suffer any influence by the dolomite.

Asian Metal: Your company mainly concerns with domestic aluminum and magnesium alloy plants; how do you think about the market demand in 2022? What about the difference against last year?

Mr. Shuai: We have long-term and stable strategic cooperation with well-known domestic aluminum plants and industry-leading enterprises. Looking back in 2021, supported by recovery of the demand in domestic and foreign markets and rising raw material prices, Chinese magnesium ingot prices went up continuously and most insiders regained confidence to the market. It is worth mentioning that the decline of magnesium ingot last September in Yulin city made prices for magnesium ingot moved up sharply. Additionally, the downstream magnesium alloy and sponge titanium industry suffered serious pressure due to price inversion. However, supported by the increasing demand from foreign alloy products, die castings and profiles, the demand for magnesium still stayed in a growth on the whole. Given the promotion of new energy and lightweight applications in China, some heavy equipment technology in the iron and steel industry also applied to the magnesium industry. It is expected that China's magnesium industry will undergo revolutionary changes and jump into a modern large industry in the future. Entering 2022, the high magnesium ingot prices will weaken the demand from downstream magnesium alloy plants. In addition, the energy shortage in Europe leads to the reduction of aluminum output, and the conflict between Russia and Ukraine will take a negative impact to the application in Europe and America. Therefore, compared with the export market in 2021, the situation in 2022 would not be so optimistic. The total export volume for magnesium would reduce by 15%-20% in 2022.

Asian Metal: According to the current supply and demand, how do you think about the price trend for magnesium ingot in Q2 of 2022?

Mr. Shuai: According to the database from Asian Metal, we noted the the total output for magnesium ingot reached about 408,080t from Jan to May of 2022, up by 14.83% YoY. As for the demand in the domestic and foreign markets, the situation is not optimistic. According to the export market, the total export volume for magnesium ingot reached about 92,978t from Jan to Apr of 2022, an increase of 13.94% YoY due to uncertain policy and cautious attitudes about our winter games. Meanwhile, the export volume for magnesium powder achieved around 23,961, down by 6.35% YoY. Normally, May and June are peak season for foreign clients to purchase, while the situation slowed down restricted by weakening demand caused by the conflict of Russia and Ukraine. Most foreign clients prefer to purchase the metal cautiously and the export volume for magnesium ingot and magnesium powder would move down by 5% YoY at least. According to domestic market demand, entering Q2 of 2022, considering spreading COVID-19 and gloomy economy, the related downstream aluminum, steel mills and automotive plants would move down output continuously and the consumption volume for magnesium ingot would decrease as well. So the demand for magnesium ingot would weaken and the consumption volume would move down by 7% YoY. Additionally, the upgrading for semi coke equipment policy issued in late 2021 will be softened due to the current pressure on economy and COVID-19. Given the above factors, I forecast that the mainstream Chinese magnesium ingot prices stay soft at RMB25,000-28,000/t (USD3,759-4,210/t) EXW D/P.

Asian Metal: What about your plan on the product differentiation? Meanwhile, do you plan to develop downstream products?

Mr. Shuai: We concern with diversified magnesium products and presently we devote to the production of magnesium ingot, magnesium alloy and alloying application. We currently have multi-dimensional contact and cooperation with domestic downstream alloy users and customers.

Asian Metal: Entering 2021, many end users worried about the price fluctuations and suppliers’ contract performance, how does your company ensure stable supply to your clients? how does your company seek balance in cooperation with your clients?

Mr. Shuai: Chinese magnesium ingot prices fluctuated sharply over the past 2021, especially in September of 2021, many suppliers rejected to carry out signed contracts. As a big producer, we cooperated with many downstream consumers. We kept carrying out signed orders and guaranteed the supply to my clients. This is also the core culture value concept we have been adhering to, which is called the "three views and one principle", namely "create value for customers, create opportunities for employees, create wealth for the society", which is also the fundamental reason for the survival and development of Qixin Alloy. Additionally, we are in the leading position in the industry in terms of technical quality, energy saving and consumption reduction, environmental protection and transformation, which are the supports for our sustainable and stable production. After this price surge, we gained more in-depth trust and support from customers, especially for some long-term cooperated clients. We always guide customers to establish long-term and effective price index by referring to Asian Metal.

Asian Metal: Thanks for accepting the interview with Asian Metal. I wish Zhejiang Qixin Alloy a better development!

Mr. Shuai: Thank you!