Executive Interviews

Asian Metal: Hello, Mr. Ma, welcome to our interview. Would you please briefly introduce your company?

Mr. Ma: Our company focuses on production of high-end aluminum alloy bars, mainly producing high-quality aluminum alloy bars of 2, 3, 5, 6 and 7 series with various specifications. Our product mix consists of cast rods of high-strength aluminum alloy, super-strength aluminum alloy and 3C electronics-purpose aluminum alloy with high surficial anodic oxidation, as well as large-sized square ingots of 4-series high-silicon aluminum alloy and 7-series aluminum alloy. We provide customized products by making full use of our advanced smelting and cast equipment, deaeration and homogeneous heat treatment furnaces, optimizing and adjusting chemical ingredients of alloys, and innovating our production technique. We hope to provide high-quality aluminum alloy cast ingots to the market to better meet clients' demand.

Asian Metal: Starting from June, the aluminum bar market witnessed notably shrinking demand which led to production reduction among some producers, while in the previous years the off season usually began slowly since the third quarter. What do you think is the main reason for the decreased demand at the end of the second quarter?

Mr. Ma: As quite a large proportion of our products are for export, we feel notable decreases in our export orders. The reasons include shrinking demand from the European and American markets as well as some orders seized by Southeast Asian suppliers. Moreover, declining demand from the other domestic provinces is another major reason for the decreased aluminum bar sales. The depressed housing sector, slowdown in NEV sales, and decreasing consumption of aluminum bar from the photovoltaic industry also led to declining aluminum bar sales since June. Our sales in June decreased by around 20%, compared with May.

Asian Metal: At the end of the second quarter, some companies sold aluminum bar 6063 with no TC charged or even unprofitable TC due to the declining demand. In your opinion, what's the reason for this?

Mr. Ma: In June, the demand for aluminum bar continued to decline while the supply was sufficient, so producers competed to sell in order to avoid inventory backlog. As a result, TCs continued to decline, and aluminum bars were sold with no TC charged or even at minus RMB50/t (USD7.00/t). In the previous years, few deals were closed at negative TCs, and the reason for TCs staying at low levels this year is that aluminum bar producers increased aluminum bar production capacity by about 20% YoY. At the end of the second quarter, the supply increased significantly while the demand weakened, so producers lowered their TCs to compete for orders, leading to negative TCs.

Asian Metal: In the previous years, the demand for aluminum bar in northern China would gradually decline after winter begins in November. However, the demand for aluminum bar in November and December this year was actually the best in the second half of the year. What do you think is the reason for this situation?

Mr. Ma: We also clearly feel that the demand for aluminum bar in November and December this year is significantly better than in previous years. Starting from November this year, orders from the NEV industry, our main downstream industry, increased substantially and our orders in November increased accordingly by about 15% from those in October. Meanwhile, the increase in orders from the solar photovoltaic industry is also the main reason for the significant improvement in demand for aluminum bar from November to December. Although there was no obvious increase in the orders of the construction industry, the demand for aluminum bar in the real estate industry still supported the stability of the entire aluminum profile industry, benefiting from supportive measures aimed at ensuring housing project delivery.

Asian Metal: According to insiders, aluminum extrusion companies will generally leave for the 2024 Spring Festival holiday one to two weeks earlier than previous years. Would that be the case in your opinion and what's your reason?

Ma: We did notice that some aluminum extrusion companies announced their notices about the Spring Festival holiday schedule as early as the beginning of December, but most of these companies are small and medium-sized ones and are relatively concentrated in construction field. Generally speaking, aluminum extrusion companies that produce extrusion products for the NEV industry and solar PV industry have sufficient orders, so the production suspension rate of these kinds of companies will be lower than extrusion companies which mainly produce extrusion products for the building industry, especially those in North China. We believe small and medium-sized aluminum extrusion companies would start their 2024 Spring Festival holiday one to two weeks earlier than previous years mainly due to the weak demand from the building industry.

Asian Metal: Primary aluminum producers are constantly improving their on-site conversion rates for aluminum liquid, which caused a substantial increase of new aluminum bar projects in the recent three years. The current production capacity for aluminum bar is already excessive. Do you think we would see a significant increase in aluminum bar projects in the next two years?

Ma: Yes, we believe that would be the case. China's monthly primary aluminum production is about 3.33 million tonnes now, and the on-site conversion rate of aluminum liquid should reach nearly 90% as required by the government, but the current conversion rate is around 70%, which indicates that there is still room for a 20% growth. Of the rest 20% of aluminum liquid to be converted into aluminum products, about 40% will be processed further into aluminum bar, so we expect that there is still some potential for new aluminum bar projects of another 3,200,000tpy in the future. Our aluminum liquid suppliers will build deep-processing projects with capacity of 600,000tpy this year.

Asian Metal: How does your company keep a foothold in the such fierce competition in the industry? What do you think is the core competitiveness of your company?

Mr. Ma: With the continuous commissioning of new aluminum bar projects, the competition in the aluminum bar industry is becoming more and more intense. In order to maintain a place in the bar casting industry, we improve the added value and competitiveness of our products through product differentiation, independent technology R&D, and more advanced production equipment, so that our products are diversified and excellent. Our company has its own R&D team, and through one-to-one docking with consumers, produces more customized products to improve customer stickiness. Through the joint efforts of the R&D team, our products including high surface performance new materials and ultra-high strength aluminum alloy materials have won critical acclaim in the industry. Our products are widely used in new energy vehicle battery cases, front and rear bumpers, seat rails, decorative parts as well as valve bodies.

Asian Metal: What is your company's future development direction and will there be any new projects?

Mr. Ma: Regarding the future development direction of the company, we will continue to be technology-oriented and produce more high-quality aluminum alloy bars products with higher added value. Our team has been developing new bars with high thermal and electrical conductivity, which will be the new direction for our business development in the future. As for new projects, we should not only be limited to the production of basic raw materials, but we also want to extend our product line towards downstream further processing. In the future, we will build our own extrusion and forging production lines. At present, we have been testing on a small scale, and will build new production lines in the future.

Asian Metal: Mr. Ma, thank you for sharing your perspectives. I wish your company a prosperous business and become a leading producer of high-end aluminum bar.

Mr. Ma: I'd like to thank Asian Metal for providing such an exchange platform for the aluminum industry, and I hope that Asian Metal will continue to provide us with more extensive and accurate industry information.