Market prospect of high-grade electrical steel for new energy vehicles optimistic
----Interview with Yonghui Li
Vice General Manager
Jiangxi Xinsteel Nanfang New Material Co.
Jiangxi Xinsteel Nanfang New Material Co., Ltd. is a state-owned holding company jointly established by Xinyu Iron and Steel Co., Ltd. and WISDRI Engineering & Research Incorporation Limited. It is one of the few enterprises in China that have achieved full coverage of non-grain oriented electrical steel products and have the production capacity of thin specifications and high grades of non-grain oriented electrical steel products. The annual output of non-grain oriented electrical steel reaches 800,000 tons.
Asian Metal: Thanks for accepting our interview Mr. Li. Please introduce your company briefly.
Mr. Li: Jiangxi Xinsteel Nanfang New Material Co., Ltd. (hereinafter referred to as Xinsteel New Material) is a state-owned holding company jointly established by Xinyu Ironand Steel Co., Ltd. and WISDRI Engineering & Research Incorporation Limited in June 2008 with a registered capital of 595 million yuan, specializing in the R & D, production, sales and technical services of cold rolled steel products. Xinsteel New Material is one of the few enterprises in China that have achieved full coverage of non-grain oriented electrical steel products and have the production capacity of thin specification and high grades of non-grain oriented electrical steel products. Through the construction of phase III projects, we have an annual production capacity of 800,000 tons of non-grain oriented electrical steel, mainly including 500,000 tons of medium and low grades of non-grain oriented electrical steel represented by 50ZW800 and 50ZW600, 200,000 tons of high-efficiency and high-grade non-grain oriented electrical steel represented by G35ZW440 and 35ZW300, and the rest of 100,000 tons of high-grade electrical steel products for driving motors of new energy vehicles represented by 20ZW1200-30ZW1500. At present, our phase IV high-performance and high-grade electrical steel project is under construction, which aims at optimizing the industrial structure, improving the proportion of high-performance and high-grade products to more than 60%, and achieving the total production capacity of one million tons.
Asian Metal: Which industries are your products mainly used in? Where are they mainly sold to?
Mr. Li: Our non-grain oriented electrical steel products are mainly used in industries such as small and medium-sized motors, compressors, large motors, household appliance transformers, new energy vehicle drive motors, UAVs, electric tools, intelligent robots and so on. The market sales area covers major developed provinces and cities in China, including Jiangsu, Zhejiang, Guangdong, Fujian, Shandong and Sichuan. At the same time, our products are also sold to overseas markets such as South Korea, India, Bangladesh, Pakistan, UAE, Turkey, Italy and Mexico.
Asian Metal: In the recent years, Xinsteel New Material has made outstanding achievements in the development of high-grade and high-magnetic induction electrical steel products. What are the advantages of your products?
Mr. Li: In the recent years, Xinsteel New Material has strengthened the upgrading of product varieties, and successively built high-efficiency and high-grade non-grain oriented electrical steel and thin specification and high-grade electrical steel projects for new energy vehicles. All the key equipment of the company is imported, and the equipment capacity, precision and reliability are highly guaranteed. The 20 high rolling mill is fully imported with DMS, and the maximum rolling speed is 800m/min.The thinnest products can be rolled with a thickness of 0.18mm, and the vertical and horizontal thickness difference is below 6 μm, and the shape control is excellent.
Asian Metal: How do you evaluate the current situation and development prospect of the new energy vehicle industry?
Mr. Li: The new energy vehicle industry has gradually matured after the rapid development in the recent years. The proposal of the national Carbon Emission Peak and Carbon Neutrality strategy has accelerated the development process of new energy vehicles. In 2021, the production and sales of new energy vehicles reached 3.5 million units, an increase of nearly three times over the previous year, showing great development potential. The next few years to 2030 will be the window period for the outbreak of new energy vehicles. The production and sales of domestic new energy vehicles are expected to reach 20 million units a year, so that fuel vehicles will be gradually replaced. In this process, the demand for high-grade NGO electrical steel will increase significantly. Due to the high technical process difficulty, there are few domestic steel mills with the production capacity of high-grade NGO electrical steel for new energy vehicles, and the international production capacity is far lower than the market demand. So I regard this market as the Blue Ocean market. Xinsteel New Material’s phase III and phase IV NGO electrical steel projects are specially built for new energy vehicles. At present, phase III project has been completed and put into operation with a production capacity of 150,000 tons a year of high-grade electrical steel for new energy vehicles. The phase IV project was started in 2021 and is expected to be put into operation in the first half of next year. After completion, the production capacity of high-grade electrical steel for new energy vehicles will be increased by 150,000 tons a year. By then, Xinsteel New Material will have an annual production capacity of more than 300,000 tons and occupy the leading place in the new energy vehicle industry.
Asian Metal: How is the current demand of downstream industries for non-grain oriented electrical steel?
Mr. Li: Because of the epidemic, the major downstream industries of NGO electrical steel, such as automobiles and home appliances, were greatly affected in the second quarter. The orders decreased significantly, and market prices fell sharply. Customers were pessimistic about the forthcoming market and the transaction was bad. According to the latest data of China Automobile Association, the domestic automobile sales volume was 1.862 million units in May of this year, a year-on-year decrease of 12.6%. From January to May, the domestic automobile sales volume was 9.555 million units, down by 12.2% year on year. As the price already approaches the cost line, some of major steel mills who have large inventories began to suffer loss. There has been a reduction in production, and the market situation is not optimistic.
Asian Metal: Since the second half of last year, domestic non-grain oriented electrical steel prices kept declining. What do you think are the main reasons for the price decrease?
Mr. Li: Domestic NGO electrical steel prices went down obviously since the second half of last year.Taking NGO electrical steel 50ZW800 produced by Xinsteel New Material as an example, the price decreased from more than RMB8,500/t (USD1,267/t) in the first half of the year to about RMB6,200/t (USD924/t) at present. The main reasons for the price decrease of non-grain oriented electrical steel are overcapacity and the imbalance between supply and demand. At the same time, the price reduction of bulk raw materials such as iron ore and coking coal led to the loss of support for the high price in the early stage. Downstream automobile, home appliance and other industries are trapped in the foreign epidemic, and their exports are blocked. Orders have decreased significantly since the second half of last year.
Asian Metal: At present, the epidemic situation abroad is still not good. How about your export business of non-grain oriented electrical steel?
Mr. Li: Last year, the export of NGO electrical steel achieved a good growth, but since the cancellation of export tax rebate of NGO electrical steel in the second half of the year, the export volume has been affected to a certain extent. In the first half of this year, our NGO electrical steel exports already decreased by about 20% year on year.
Asian Metal: What’s your prediction of the domestic non-grain oriented electrical steel market in the third quarter?
Mr. Li: With the sharp decline of market prices in the second quarter, the market prices in the third quarter are expected to reach the bottom. With the gradual implementation of domestic macro-control policies and the improvement of demand, the market prices may rise slightly, and the increase is expected to be around RMB200/t (USD30/t).
Asian Metal: Do you have any new plans for product and market development in 2022?
Mr. Li: In 2022, we will focus on the development of high-efficiency motors, new energy vehicles,variable frequency compressors, intelligent robots, electric tools and other industries, and increase the market user expansion of high-grade and thin specification varieties with specifications of no more than 0.3mm.
