Wang Zaitian: Combining enterprise with regional advantages will promote healthy development of the silicon metal Industry
----Interview with Wang Zaitian, Marketing Director of Chemicals Dept, East Hope Group Co., Ltd.
- East Hope was set up in 1982 by Liu Yongxing, a well-known private entrepreneur in China, and was one of the first private enterprises established after the country opened up following the reforms. The company has now developed into a large private group which integrates agriculture with other fields, including the heavy chemical industry. Headquartered in Pudong, Shanghai, Hope Group has more than 150 subsidiaries and is listed among the top 500 enterprises in China. The group currently has 101 subsidiaries engaged in fodder, lysine and other agricultural fields, which are scattered across most provinces and cities in China, Singapore, Vietnam, Indonesia and Kampuchea, as well as other countries. The group is also involved in heavy chemical fields, including electrical power, nonferrous metals, biology chemicals, coal chemicals, chlor-alkali chemicals, petroleum chemicals, mining and building materials. It has established large plants producing thermal power, electrolytic aluminum, alumina, methanol, dimethyl ether, PTA, PVC, cement alongside other heavy chemical plants in Inner Mongolia, Xinjiang, Chongqing, Henan, Shandong and other places.
- Asian Metal: Hello, Mr Wang, thank you for taking the time to participate in this interview. Firstly, could you please give us a brief induction to East Hope’s main business activities?
- Wang: Hello Ms Yin. East Hope attended the 3rd World Silicon Forum held by Asian Metal in Beijing in May and we introduced our silicon metal project during the forum. We are a new participant in the silicon metal industry, and with a willingness to learn, we will try our best to promote healthy development and change within the industry.
- East Hope Group, a private enterprise, was established in 1982 in Xinjin county, Sichuan province. The Group’s headquarters moved to Lujiazui, Pudong, Shanghai from Sichuan in 1998. The major industries are as follows:
- Agriculture industry: The Group produces fodder, lysine, methionine and some other products; our capacity and production of the above products place us top of the list in the fodder industry.
- Aluminum electricity industry: The Group has set up production lines for electrolytic aluminum and aluminum fabrication with a capacity of 2 million tonnes, with alumina capacity of 2.5 million tonnes and an accompanying thermal power plant. The capacity and production mean we are top of the pile in terms of the aluminum electricity industry at home and abroad, after more than 10 years’ effort, and the enterprise’s revenue is in top spot within China as well.
- Building material and chemical industries:The Group has set up production lines for PTA with a capacity of 900,000t, methyl alcohol with a capacity of 500,000t, calcium carbide with a capacity of 1.2 million tonnes, polyvinyl chloride with a capacity of 400,000t and a new dry process cement with a capacity of 13 million tonnes; matching production lines for the first three have also been built. They also produce industrial silicon, calcium metal and lithium metal.
- The Group is also involved in the real estate and investment fields.
- The turnover of the Group totaled RMB70 billion in 2014.
- Asian Metal: Changji Jisheng New Building Materials Co., Ltd. is the silicon metal smelter found by East Hope Group in Xinjiang. Can you please briefly summarize the smelter’s production capacity and future production plans?
- Wang: Changji Jisheng New Building Materials Co., Ltd. is the first silicon metal enterprise that East Hope has built. The smelter now has eight furnaces of 33,000kva with an annual production capacity of around 150,000t. There is a possibility that East Hope will build a second or third phase of silicon metal furnaces.
- Asian Metal: This project is a relatively big one in terms of the silicon metal industry. What were the advantages of building a silicon metal smelter in Xinjiang?
- Wang: East Hope entered the silicon metal industry with the following advantages. Firstly, East Hope has 14 years’ experience in the heavy chemicals industry. Secondly, our costs will be competitive with abundant coal reserves as a resource and low power prices thanks to our own thermal power plant. Moreover, we have gained an advantage in investment. After around 30 years’ development, we have established a highly effective investment concept: high-quality, fast and cost-saving, which is also one of the major factors behind East Hope’s steady growth.
- Asian Metal: As I understand it, the smelter started production at the end of August. How many furnaces have you got running currently? Do you have plans to open more furnaces in the near future?
- Wang: The products from the first furnace came out in September. We are now warming the second furnace and the products are expected to come out in October. The remaining six furnaces will gradually be put into production later on.
- Asian Metal: Which grades of silicon metal is the smelter mainly producing at present?
- Wang: The products from the first furnace are mainly 4-2-1, 4-1-1 and 3-3-0-3 grade silicon metal.
- Asian Metal: Where are you expecting to make sales, the local market or overseas?
- Wang: We will sell silicon metal in both the domestic and overseas markets.
- Asian Metal: The Chinese silicon metal market was strong in the first three quarters of 2014. Some smelters expanded their capacity and a number of participants from other fields transferred furnaces over to produce silicon metal at the time. Chinese silicon metal prices have dropped sharply in 2015. What are the reasons for the price drop and what are your expectations for the market in Q4?
- Wang: Due to cost advantage evaluations, some producers built new furnaces or switched to producing silicon metal. Furthermore, Chinese silicon metal export volumes increased significantly in 2014 due to the declining output in Brazil. And thus, the silicon metal production capacity increased sharply last year.
- In the last couple of years, the global economy has seen no recovery with prices for bulk commodities falling continually. The prices for most products, such as crude oil, copper, aluminum, PTA and rubber, have fallen below or close to their lowest level since 2008. This was a systematic market price factor and silicon metal prices also dropped this year. Although the total production capacity for silicon metal in China is around 3,850,000t,the effective capacity isn’t especially excessive, as many smelters remain out of action due to uncompetitive production costs or seasonal factors. In the future, production capacity will gradually move towards areas with advantages in production. As for the trend in Q4, I think the silicon metal price will go up as some smelters in Southern China will stop production in the dry season. The expectation is that China‘s 13th plan of five-year national development and the 18th National Congress of the Communist Party of China will have a positive influence on the Chinese economy and bulk commodities will be in an adjustment phase in the latter part of this year and early next year.
- Asian Metal: Thanks for sharing your views. I hope the silicon metal production goes smoothly and wish your company a bright future.
- Wang: Thank you. I expect Asian Metal to be a reliable and fair platform in the silicon metal and other metal industries, supporting their healthy development.
