High-quality calcined bauxite supply tightens further

Asian Metal: Mr. Liu, could you please introduce your company's history, production scale and main products briefly?

Mr. Liu: CMP, a European company, has been running for 22 years in China and owns eight large mineral processing plants and one mine. The plant, near Tianjin port, is the largest processing plant of refractory minerals in Asia. Its products include high-aluminum refractory grain sand, calcined bauxite, mullite, kaolin, flint clay, brown fused alumina, dead burned magnesia, silicon carbide, graphite flake, spherical foundry sand and ceramsite sand.

Asian Metal: It is heard that your company's newly-built high-aluminum calcined bauxite production line in Guizhou has realized mass production, so could you please introduce the advantages of the products made in Guizhou?

Mr. Liu: CMP Guizhou Co., Ltd., a subsidiary of CMP, mainly conducts mining, calcining and processing of calcined bauxite, and formally performed mass production of high-aluminum calcined bauxite 90%min using rotary kilns this May.

CMP Guihzhou has one environmentally friendly rotary kiln with the diameter of 3m*78m, which is a professional and automatic facility for production and processing of calcined bauxite with the largest diameter ratio in China now. CMP Guizhou can produce high-quality calcined bauxite and has achieved mass production of calcined bauxite 90%min using the rotary kiln at the moment. The average and highest bulk density of our calcined bauxite 90%min reaches 3.4g/cm³ and 3.55g/cm³ respectively due to high bulk density of bauxite in Guizhou. The calcined bauxite has good crystallization with calcination of 5-6 hours, so it can replace part of brown fused alumina to decrease costs during the production of refractory materials.

Asian Metal: Calcined bauxite prices fell back and producers saw limited deals in H1 2018 in spite of tight bauxite supply and frequently environmental inspections, so what's your opinion on this?

Mr. Liu: Chinese calcined bauxite prices did dip in H1 2018 mainly due to poor demand at home and abroad. On one hand, calcined bauxite producers could not run normally in Shanxi, Henan and other regions affected by comprehensive environmental inspections, and faced with environmental pressure, they witnessed higher production and operation costs for rectification; on the other hand, environmental inspections also restricted the production and output of refractory material and steel companies, leading to dim end demand. In addition, because of sharp fluctuation in raw materials' prices and supply in 2017, Chinese and overseas buyers prepared large quantities of stocks, and as a result during the first half of 2018 they kept consuming those stocks and made fewer new purchases. To sum up, calcined bauxite prices edged down amid sparse transactions in H1 2018.

Asian Metal: What's your company's output of calcined bauxite in H1 2018?

Mr. Liu: CMP Tianjin, with an annual capacity of 300,000t of calcined bauxite and one-third operating rate, produced about 60,000t limited by weak demand in the first six months of this year.

Asian Metal: Does your company consider transformation and R&D of new products in the context of fierce competition on account of sufficient supply of traditional refractory raw materials?

Mr. Liu: Our company invested capital, manpower and material resources in 2016 to introduce scientific talent, purchase modern equipment of R&D, production and checkout from foreign market and develop new materials and high-end products. At present, we have successfully developed spherical alumina, spherical silica powder and other high value-added spherical products like SNOWSPHERE which are widely applied in electronic packaging, chip packaging, optical fiber and cable, special engineering plastic, rubber, ceramic, stuffing used in heat dissipation board, thermally conductive silicone grease, printing ink, daily-use chemical and other industries.

Asian Metal: China restrained exploitation and protected mine resources over the past few years, resulting in scarce bauxite supply in the Chinese market. As a calcined bauxite producer, what do you think of raw material supply and will you adopt imported bauxite in the future?

Mr. Liu: Bauxite mines in Henan, Shanxi and Guizhou are all affected by environmental inspections, safety production and mine management policies. Bauxite resource reduces in Henan due to large mining, CHALCO is the main mining enterprise in Shanxi and others without mining license generally shut down, leading to tighter supply of the material.

China currently imports a large quantity of low-aluminum bauxite mainly to supply alumina plants. While of refractory companies, only Bosai Group uses high-aluminum calcined bauxite which has not been imported in bulk so far.

Asian Metal: What do you think of the impact of Sino-US trade friction on refractory material industry?

Mr. Liu: The trade friction between China and US in H1 2018 had a great impact on the economic environment. However, in reality, refractory raw material calcined bauxite, fused alumina and other minerals did not be listed for increased tariffs. In the long run, US's high tariffs on China's steel and aluminum products mean that it needs to rely on self-supply or source steel and aluminum products from other channels. Thus, it cannot get rid of supply of China's refractory raw materials in the final, which might improve the demand for Chinese refractory raw materials.

Asian Metal: What's your opinion on the market trend of calcined bauxite in H2 2018?

Mr. Liu: The H2 2018 calcined bauxite market will improve. On one hand, end users badly need to purchase raw materials or even refill stocks which are running up; on the other hand, prices might edge up after August due to tighter raw material supply with stricter environmental inspections. Moreover, we don't think that the Sino-US trade friction will negatively affect Chinese refractory material industry. Even though US levies tariffs on China's steel and aluminum products, its demand for refractory raw materials will increase inevitably as it needs to ensure self-supply or buy steel and metallurgical products from others.

Asian Metal: How do you think of the development trend of traditional refractory material industry in the future?

Mr. Liu: Refractory materials are irreplaceable in the traditional basic industry. They are needed as long as steel smelting exists. China's policies and systems will perfect to gradually forbid abusing resources and selling at low prices. In addition, traditional refractory raw material companies largely evade taxes, but healthy competition will be fostered with the elimination of some zombie and illegal companies following stricter tax systems and environmental inspections. What's more, faced with heavy pressure of environmental inspections, traditional refractory material producers need to run towards a high value-added, high-efficiency and low-pollution direction, and comply with laws and regulations.