Asian Metal: Hello, Mr. Mao. Thanks for taking our interview. Would you please give a brief introduction to your company at first?

Mr. Mao: Founded in 2007, our company is an alloy production enterprise specializing in high-quality zinc alloy products. Situated in Yinjiang Meiyuan Industrial Park of Ningbo City, it has a land area of 10,000 square meters and a monthly production capacity of 6,000t. It has been granted with GRS and ISO certificates, with products produced in environmentally-friendly line-frequency furnaces and production lines installed with full-automation ingot casting and ingot placing systems. We use Hitachi spectrograph to control our alloy quality and adopt the U.S. ASTM B240 standards. Having passed the SGS certification, we are qualified to export our products to Europe and the U.S. where environmental protection standards RoHS are enforced and to Europe where REACH Act is enforced.

Asian Metal: What are your major products? And how is your operation going on now?

Mr. Mao: Our zinc alloy portfolio mainly consist of Zamak-2, Zamak-3, Zamak-4, Zamak-5 and Zamak-8 varieties, which are high-end alloys used for die-casting industry, and we also provide customizing service for clients who have particular requirements on alloy tenacity. Now our products are widely used in bathroom ware, lockset, hardware accessory, auto accessory, decoration article, and zipper industries. Thanks to a dozen years of operation and high quality of our products, we have a client base of over 200 companies now and are direct or indirect suppliers for many renowned companies. We have an annual production capacity of 72,000t of zinc alloy and maintain steady production now with monthly output hovering at around 3,500t. Our output in 2020 totalled about 40,000t and that in 2021 is expected to be 55,000t.

Asian Metal: In 2020 the COVID-19 pandemic raged all around the world. In the light of market conditions last year, how do you think of impacts of the pandemic on the zinc alloy market? Which downstream industries have been notably affected in terms of demand?

Mr. Mao: The COVID-19 imposed great effects upon the zinc alloy market. In 2020, our sales decreased generally by about 25% from those in 2019. Exports of zinc die-casting alloy’s end products generally account for 30-40% of their total consumption in China, and many of our clients come from industries such as zipper whose exports account for a large proportion of the total consumption. In 2020, with overseas pandemic situation continuously deteriorating, China’s exports such as zipper shrank notably, leasding to a great decrease in our sales. Moreover, statistics show that in 2020 global auto production decreased by over 20%, and accordingly demand for zinc die-casting alloy from auto accessory industry decreased significantly.

Asian Metal: How do you think of market demand for zinc die-casting alloy this year?

Mr. Mao: I believe that downstream demand will grow in 2021. With COVID-19 vaccines developed and populations vaccinated, the pandemic will be gradually go under effective control, and demand from various industries, especially from overseas markets, will release further, thus driving the increase in demand for zinc alloy. Taking our company as an example, in the first quarter of 2021 our production and sales totalled 8,000t, in contrast with only 5,400t in the same period of last year. Thus, we can say that demand has grown notably hits year.

Asian Metal: In your opinion, what are the common challenges faced by zinc die-casting alloy producers at present?

Mr. Mao: In my opinion, the biggest challenge is that there are more zinc ingot smelting plants beginning to produce zinc die-casting alloy by themselves. As far as I know, now in China there are about ten traditional zinc ingot smelting plants which produce zinc die-casting alloy, and I believe that in the future this number will further grow. Thanks to their advantages in capital, company background and raw material supply, such zinc ingot smelting plants can produce zinc die-casting alloy directly following zinc smelting and therefore save second-time smelting costs and transportation costs for raw materials bought from the market, and also spare themselves from traders’ price gaps. Compared with traditional zinc alloy plants, zinc ingot plants can save zinc alloy production costs by RMB200-400/t (USD30.82-61.65/t). For example, TCs for zinc die-casting alloy Zamak-3 produced by traditional alloy plants usually stay at RMB500-700/t (USD77.06-108/t), while those for the material produced by zinc ingot plants can be as low as RMB200-300/t (USD30.82-46.24/t). This leads to increasing market competition and shrinking profit margins of traditional zinc alloy plants.

Asian Metal: How should zinc alloy plants respond to this challenge?

Mr. Mao: In my opinion, on one hand alloy plants should switch from their extensive management model in old days to fine management, enhancing technical strengths and providing high-quality products and service to clients, and also try to make defective rates lower and increase direct purchase rate of raw material so as to fulfill the goal of costs reduction and efficiency improvements. On the other hand, alloy plants should enhance their innovation capacities of developing customized products to follow the market trend, and by targeting different niche markets, alloy plants can avoid direct competition with zinc ingot smelting plants.

Asian Metal: Prices of zinc ingot, the raw material, are closely linked to those for zinc die-casting alloy. How do you think of zinc ingot price trends in 2021?

Mr. Mao: I feel bullish on zinc ingot prices in 2021 but I believe that there would be no significant increases. The first reason is that upstream zinc concentrate supply is tight and TCs of the material hover low levels, thus providing support to zinc ingot prices. Secondly, as Chinese government trying to fulfill the goal of carbon neutrality, some regions such as Inner Mongolia emphasize energy saving and emission reduction, and accordingly production of some zinc smelting plants and mines is restricted, so it is possible that zinc ingot production in China might shrink in 2021. Moreover, with the COVID-19 pandemic gradually controlled, market participants commonly anticipate a recovery in the global economy, which will help boost demand for zinc ingot. But zinc ingot prices already moved up significantly in earlier time of this year, and notable inflation signals have been observed at present, so it is said that Chinese government plans to release its zinc ingot reserve into the market. Moreover, the National Development and Reform Commission (NDRC) recently also said that there is sufficient adjustment room in China’s macro-level economic policies, so prices of staple commodities have no basis of long-time increasing. Based upon the above reasons, I believe that in 2021 zinc ingot prices would move up but would not rise at a great rate. The upper-end of their fluctuation range is expected to be around RMB25,000/t.

Asian Metal: What are the future development plans and goals of your company?

Mr. Mao: In 2021, we will continue to provide steady-quality products to client, stabilize existing client base and develop new clients. We hope that our sales in 2021 can achieve new growths on the basis of 2020 sales. Meanwhile, we will also cling to the development direction of innovation by providing customized and more suitable products to meet demand of different clients.

Asian Metal: Thanks for taking our interview. Wish your company better and better!

Mr. Mao: Thanks.