Promising prospect for secondary aluminum alloy market in 2018

Asian Metal：Thank you very much for accepting the interview with Asian Metal. Would you please give us a brief introduction to the current state of Huilian Aluminum?

Mr. He: Jiangsu Huilian Aluminum Co., Ltd. ("Huilian Aluminum") was jointly built in 2011 by China Huilian (Hong Kong) Resources Holding Co., Ltd. and Shanhai (Hong Kong) Trade Investment Co., Ltd. In October 2015, Wuxi Industry Development Group Co., Ltd. and Lianyungang Shanhai Company acquired 71.5% and 28.5% of stake in Huilian Aluminum respectively. Our company is located in Lianyungang Marine Economic Development Zone and covers an area of 370mu (about 246,667 square meters) including plant area of 180,000 square meters. With registered capital of USD21 million, Huilian Aluminum is one of the key secondary aluminum alloy enterprises in China and has launched project of aluminum alloy ingot (rod) with capacity of 300,000tpy, which can achieve annual sales value of RMB5 billion (about USD797 million).

Asian Metal：In 2017, the environmental inspection exerted huge impact on China's aluminum alloy industry. What's your opinion on the influence from environmental protection on aluminum alloy production domestically in 2018?

Mr. He: Environmental protection is a long-term policy that China sticks to for the benefit of the people and it will only become stricter. The environmental inspection in 2018 won't exert negative impact on our production as all of our EIAs are approved and the environmental protection equipment is up to standard.

Asian Metal：What do you think of the Chinese aluminum alloy market in 2018?

Mr. He: We are optimistic about the aluminum alloy market in 2018 when we expect to receive stable orders from automobile industry and sharply increased demand from several other companies.

Asian Metal：We know that Huilian Aluminum also has export business for aluminum alloy. What are the impacts from China's new customs policy on your export business?

Mr. He: The import of raw material is affected. Originally, the dust proportion in imported Zorba aluminum scrap is required to be less than 1%, and now the proportion is further reduced to 0.1%. So we have to import more purified aluminum scrap with higher price, which means higher production cost.

Asian Metal：More and more secondary aluminum alloy plants now prefer aluminum liquid to aluminum ingot. Do you think it's a trend in the future?

Mr. He: Aluminum liquid has more advantages over aluminum ingot. Firstly, the cost for aluminum liquid is lower as it requires less remelting process; secondly, customers for aluminum liquid usually would sign long-term contracts, which means more stable business and lower financial risk for companies. I believe it's a trend that more aluminum liquid will be produced in the future.

Asian Metal：The ADC12 aluminum alloy market has seen increasingly fierce competition, which led to more narrowed profit margin. Some companies have invested more in the production and R&D of special kinds of aluminum alloy product. Do you think this would help to advance a sound development of secondary aluminum alloy market?

Mr. He: ADC12 aluminum alloy accounts for 60% of our total output with other kinds accounting for 40%. Increasing investment in the production and R&D of special kinds of aluminum alloy ingot will help us enhance competitiveness. By devoting more effort to technology innovation, we won't compete blindly on price for low-end products. I think this is better for a sound development of secondary aluminum alloy market.

Asian Metal：Does the U.S. tariff on Chinese aluminum have any impact on Huilian Aluminum?

Mr. He：We mainly target customers from the United States and Japan. Affected by Trump's trade war against China, our exports of aluminum alloy ingot to US indeed decreased temporarily. But we aren't sure about where this is going as related policies haven't been finalized yet.

Asian Metal: We've learnt that Huilian Aluminum will expand the size of business and production this year. Would you please tell us a little about your plans for the future?

Mr. He: Our phase I project has a designed capacity of 100,000tpy. We originally had one set of furnace of 30t and added another set of 80-ton furnace last year. In addition, we also own six ingot casting lines and one set of automatic sorting and flotation equipment. Our phase II project has a designed capacity of 200,000tpy and tends to focus on aluminum liquid production, but it is still in the planning stage. For products, we pay more attention to brand effect and focus more on improving quality and enhancing competitiveness, mainly targeting mid-to-high end market.