Executive Interviews

Asian Metal: Hello, Ms. Wang. Welcome to Asian Metal's Interview. Could you please briefly introduce your company?

Ms. Wang: Our company mainly produces and manufactures various aluminum billets, aluminum profiles and processed aluminum billet products. Relying on mature smelting processes and a stringent quality control system, our products feature high strength, corrosion resistance and lightweight properties, and are widely used in architectural decoration, transportation, electronic appliances, machinery manufacturing and other fields. From raw material selection to finished product delivery, every production process undergoes rigorous inspection to ensure that our products comply with national standards and industry specifications. Backed by strong technological capabilities and an efficient service team, we can not only meet customers' conventional requirements but also provide customized products according to their specific needs. Our flexible production model and fast delivery capabilities have earned the trust of numerous business partners.

Asian Metal: At the beginning of the second quarter, aluminum billet PCs once again fell into negative territory. What do you think caused this situation? Why did negative billet PC transactions occur more frequently this year than last year?

Ms. Wang: I believe the main reason for aluminum billet PCs falling into negative territory at the beginning of the second quarter was weak consumption. Based on previous years' experience, the second quarter is normally the peak consumption season for aluminum billets, and aluminum billet producers generally operate at relatively high rates. However, at the beginning of this year's second quarter, demand for construction aluminum profiles from the property sector was sluggish, resulting in a decline in demand for aluminum billets. Aluminum billet producers accumulated inventories, while the price of primary aluminum rose to a first-half high of around RMB25,000/t in April, further dampening the willingness of downstream extrusion profile producers to purchase. Under these circumstances, aluminum billet producers had to continuously lower their PCs and selling prices to accelerate cash collection. Our company's billet PC fell to as low as -RMB200/t in the second quarter. The higher frequency of negative billet PC transactions this year compared with last year was mainly due to weak aluminum billet consumption and severe cash flow pressure on aluminum billet producers. In addition, primary aluminum prices rose sharply when producers were already under significant pressure to collect payments, which further drove billet PCs lower.

Asian Metal: Aluminum billet PCs continued to strengthen in May and June. What do you think supported the increase in billet PCs during these two months?

Ms. Wang: First, primary aluminum prices began to fluctuate downward in early May, falling from a high of RMB25,150/t in April to around RMB23,700/t in June. Some downstream aluminum profile producers that had been waiting on the sidelines began replenishing inventories, driving up demand for aluminum billets. Second, export orders for aluminum profiles increased significantly in May. Aluminum billet PCs in Guangdong continued to strengthen and was higher than that in Sichuan. Some aluminum billets from Guizhou that had previously been sold into Sichuan were redirected to the Guangdong market. As a result, aluminum billet supply in the Sichuan market became relatively tight in May and June, with our company's billet PC reaching a high of RMB480/t during this period.

Asian Metal: How are aluminum billet PCs currently performing in the third quarter? What is your view of aluminum billet demand in the fourth quarter? Do you expect PCs to strengthen?

Ms. Wang: It will be difficult for aluminum billet PCs in the third quarter to remain at May-June levels. July and August are traditionally the off-season for consumption. In particular, construction activity declines sharply due to high temperatures, reducing demand for aluminum billets. In addition, as temperatures rise in July and August, Sichuan may impose restrictions on industrial power consumption to ensure electricity supplies for residential use. Based on previous years' experience, operating rates at downstream aluminum profile producers could decline by around 30%. As a result, the PCs for 6063 aluminum billets are expected to fall back to RMB300-400/t delivered in the third quarter. The fourth quarter is the peak consumption season for the aluminum billet market, and demand for aluminum billets is expected to increase significantly. In addition, some companies have a tendency to boost sales volumes toward the end of the year. Therefore, I believe the aluminum billet market will see both higher volumes and prices in the fourth quarter, with billet PCs expected to increase significantly.

Asian Metal: Most companies add a certain proportion of aluminum scrap during aluminum billet production. Currently, aluminum scrap supply is tight. What do you think are the reasons behind the shortage?

Ms. Wang: Since the beginning of this year, aluminum scrap supply nationwide has remained tight, and our market in Sichuan is facing the same shortage. I believe the current aluminum scrap shortage is attributable not only to insufficient supply itself, but also to increased purchases of aluminum profile scrap by producers of cast aluminum alloys due to a shortage of input invoices. This has diverted part of the available aluminum scrap feedstock and made the shortage of aluminum profile scrap even more pronounced.

Asian Metal: How is your company responding to the shortage of aluminum scrap supply?

Ms. Wang: At present, there is no particularly effective solution to the shortage of aluminum scrap supply. We can only expand our procurement scope and increase the number of sourcing channels. Previously, we sourced aluminum scrap only in southwest China.

Asian Metal: In the second quarter, some regions suspended the reverse invoicing policy in the aluminum scrap recycling sector, resulting in lower cast aluminum alloy output. Has the aluminum billet industry also been affected?

Ms. Wang: The aluminum billet industry has also been affected. Cast aluminum alloy producers have been competing for aluminum profile scrap, increasing demand for this type of scrap and pushing its price up by 3%-4%. As a result, our production costs have increased.

Asian Metal: What are your company's future development plans? Do you have any new projects?

Ms. Wang: Our Guangyuan plant is a newly established facility, founded in 2022. Currently, all workshops in Phase I are operating normally. The Phase II production workshop was completed in early 2025, with a designed annual production capacity of 20,000 tonnes of aluminum profiles. However, as profit margins for extruded aluminum profiles have declined significantly, the Phase II project has been postponed, and equipment installation has not yet begun. For now, we plan to maximize capacity utilization at the Phase I facility while improving the added value of our products through technological innovation, thereby enhancing the company's profitability.

Asian Metal: Thank you, Mr. Wang, for accepting this interview. We wish Sichuan Xinhexin Aluminum Co., Ltd. continued success and prosperity.

Ms. Wang: Thank you.