Executive Interviews

Asian Metal: Hello, Mr. Lou. Thank you for accepting Asian Metal's interview. Please introduce your company briefly.

Mr. Lou: Jiangxi Jinfeng Metal Products Co. Ltd., founded in September 2020 and invested by Jinfei Holding Group Co., Ltd., is a secondary aluminum comprehensive utilization plant specializing in scrap recycling, pretreatment, smelting and casting. The construction of company's secondary aluminum comprehensive utilization project of 150,000tpy started on November 20, 2020 and the project went into operation on January 21, 2022. The project, with a planned investment of more than 2 billion yuan (280 million US dollars), covers an area of 100mu and brings a sales revenue of 3 billion yuan (420 million US dollars), as well as tax of 150 million yuan (20.02 million US dollars). The plant has raw material pretreatment lines, a large crusher of 450kW, an eddy current impurity removal system and an automatic Italian X-ray sorting machine. The smelting process is equipped with three 35-ton smelting furnaces with regenerative combustion system, one double-chamber furnace composed of a 20-ton tower furnace and a side-feeding well, two automatic production lines of circulation of die cooling and ingot casting, an advanced aluminum-ash separator and supporting comprehensive aluminum slag recovery device, and an environment-friendly bag-type pulse dust removal system for efficient treatment to smoke and dust from aluminum scrap smelting and a Spectro spectrograph. The company mainly produces A356, ADC12, A380, ALSI9CU3 and other series of aluminum alloy ingot, which are widely used in traditional and new energy vehicles, motorcycles, electronic information, machinery manufacturing, building hardware and other industries.

Asian Metal: Usually, it is during September and October that the secondary aluminum alloy ingot market embraces active purchases, and how about the market demand for secondary aluminum alloy ingot from September to October this year?

Mr. Lou: In comparison to previous years, orders began to decrease from this August, and there is no peak season at all this year. Orders of our plant in Yunnan decreased by about 30% in September from the same period last year. I think there are two main reasons for the low peak season. One is the repeated Covid-19 which significantly weakened people's consumption ability and caused declined orders from die-casting plants. The other is the shrinking die-casting orders from European and American countries.

Asian Metal: The demand for secondary aluminum alloy ingot would gradually weaken from the fourth quarter in former years, and what do you think of the demand in the fourth quarter of this year?

Mr. Lou: According to the current market consumption, the economy bears heavy downward pressure this year. In the downstream consumer industry, only the new energy vehicle industry performed well, and the overall demand of other industries was lower than that of the same period in previous years. I think the market demand for secondary aluminum alloy ingot in the fourth quarter would weaken on the whole, but not too much, because some enterprises need to complete their annual tasks at the end of the year.

Asian Metal: The imported secondary aluminum alloy ingot began to impact the domestic market after the outbreak of the epidemic. Do you think it will become normal for imported secondary aluminum alloy ingot to impact the Chinese market in the future?

Mr. Lou: Before 2020, China's monthly import of secondary aluminum alloy hovered at 5,000-10,000 tons, but within half a year after 2020, the volume increased to around 100,000 tons, which indeed had a certain impact on the Chinese market in terms of quantity. However, it is also conditional that large quantities of imported secondary aluminum alloy ingot can enter the Chinese market. First, the prices of the imported secondary aluminum alloy ingot should be at least RMB500/t (USD69.85/t) lower than those in Chinese market. Second, the imported materials must meet the national standards. Third, the import of secondary aluminum alloy ingot is also restricted by some factors. On the one hand, there is no after-sales service for imported aluminum alloy ingot, which is not generally recognized by downstream consumers at present. On the other hand, most consumers prefer to pick up spot goods at the port, and only a few consumer enterprises are willing to accept a delivery period of more than one month. Therefore, whether the imported secondary aluminum alloy ingot will have a long-term impact on the Chinese market still subjects to many factors.

Asian Metal: The market began to see short supply of aluminum scrap from the third quarter of this year. What do you think is the reason for this?

Mr. Lou: First, the economy bore great downward pressure this year and orders of die-casting plants decreased substantially, resulting in a sharp reduction in scrap generated by plants. Second, the transportation was restricted for the anti-epidemic measures, so the recovery of aluminum scrap decreased. Third, dismantlers held back from selling because of the high cost of aluminum scrap in stock, and they even stopped production in July-August due to the high temperature, leading to a sharp decline in the quantity of dismantled aluminum scrap. This also led to our aluminum scrap inventory being lower than the safety inventory level for a long time from August to September. In the fourth quarter, the epidemic came back again, and the transportation was further restricted. In addition, the amount of aluminum scrap dismantled remained at a low level, so the overall supply of aluminum scrap kept tight, and our aluminum scrap inventory is still low at present.

Asian Metal: How does your company cope with the current shortage of aluminum scrap?

Mr. Lou: Faced with the shortage of aluminum scrap, we first expanded the purchase channels in domestic market, and purchased from more suppliers to increase purchase volume. Besides, we gradually increased the proportion of imported aluminum scrap, and used imported aluminum scrap to supplement the insufficient supply of domestic aluminum scrap.

Asian Metal: Do you think the shortage of aluminum scrap would be eased in the fourth quarter?

Mr. Lou: In October, the supply of aluminum scrap remained tight, but in November, it increased gradually as aluminum recycling and dismantling companies resumed normal operation one after another. In addition, the demand for secondary aluminum alloy ingot will gradually decline at the end of the year and the consumption of aluminum scrap will decrease accordingly. Therefore, we reckon that the shortage of aluminum scrap in Chinese market would be eased gradually from November.

Asian Metal: At present, China strongly supports the development of green economy, and secondary aluminum will be a new explosion point in the aluminum industry in the future. So where is your company headed in the future, and are there any new projects?

Mr. Lou: We will also focus on the development of secondary aluminum alloy, and our business will expand to the research, development and sales of structural parts and heat treatment free materials. In terms of automobile wheels, we concentrate on how to use secondary aluminum to replace some of the primary aluminum to produce automobile wheels. At present, the industry mainly uses primary aluminum to produce automobile wheels. Our goal is to add 40%-50% secondary aluminum to make automobile wheels that meet the same physical performance standards as those made from primary aluminum. In terms of automobile structural parts, we will partially replace the structural parts produced by primary aluminum alloy with those produced by secondary aluminum alloy. The overall goal is to use secondary aluminum products to replace more primary aluminum products. We have no plan for new projects in the coming two years.

Asian Metal: Thank you again for joining our interview. I wish Jiangxi Jinfeng Metal Products Co. Ltd. a prosperous business.

Mr. Lou: I am very grateful to Asian Metal for providing secondary aluminum alloy enterprises with a platform for mutual exchange. I hope that Asian Metal will continue to provide us more and accurate information on the metal industry.