----Interview with Guohui Qu
Board Director/Deputy Marketing General Manager
Hubei Yifute Environmental Protection Technology Co.
Hubei Yifute Environmental Protection Technology Co. was established in 2019 and is controlled by Hubei Yihua Songzi Fertilizer Co., a subsidiary of Hubei Yihua Group. The company is located in Lingang Industrial Park of Jingzhou City, a beautiful riverside city in Hubei Province. They use fluosilicic acid, the by-product of Songzi Fertilizer's phosphoric acid plant, to produce aluminum fluoride, with an annual capacity of 24,000t. The company's aluminum fluoride is characterized by high purity AlF3 95%min, low impurity content and good fluidity, etc.
Asian Metal: Welcome to participate in this interview and please briefly introduce your company's main business at first.
Mr. Qu: Hubei Yiflute, affiliated to Hubei Yihua Group, mainly produces low-density (LBD) aluminum fluoride, with one production line and the annual production capacity of 24,000t. The domestic market share accounts for about 90% with customers like Chalco, Weiqiao Aluminum Co. and other well-known aluminum smelters, while the export market share accounts for about 10%. We target around 23,000t of production this year, the same as last year.
Asian Metal: Chinese domestic aluminum fluoride prices climbed rapidly from early Q4 this year. What is the price movement and how about the reasons? Will prices continue to rise until the end of the year?
Mr. Qu: The main reason is that the price of aluminum hydroxide rose sharply since October with the average price rising RMB700/t (USD97/t). The aluminum hydroxide unit consumption for LBD aluminum fluoride reaches around 1.3t, while that for high-density (HBD) aluminum fluoride is around 1t. By the end of October, the bidding price from downstream aluminum enterprises rose sharply from the previous month, for example, our sales price for November was about RMB9,000/t (USD1,244/t) EXW, an increase of RMB900/t (USD124/t). As aluminum hydroxide prices continue to rise in November, I think aluminum fluoride prices will move up further.
Asian Metal: Is there a fixed price gap between domestic LBD aluminum fluoride and HBD aluminum fluoride? What is the main reason for the price gap?
Mr. Qu: Yes, there is a price difference and the price for LBD aluminum fluoride is around RMB1,500/t (USD207/t) cheaper than HBD aluminum fluoride. I think the main reason is the consumption habits. The current application of HBD aluminum fluoride in domestic market accounts for at least 85%, while the proportion of LBD aluminum fluoride is still relatively small. In addition, aluminum smelters in China focus more on the stability of production and are not inclined to shift to LBD. In fact, under reasonable management, the shift would not affect the stability of production. In terms of cost per unit consumption, our LBD application in Shandong is less than 15 kg, which has certain advantages compared with HBD aluminum fluoride, because the purity of LBD aluminum fluoride could reach 95%min, higher than HBD aluminum fluoride 91%min.
Asian Metal: What is the aluminum fluoride production capacity of China in 2024 and how about the growth? What is the situation for LBD aluminum fluoride? Will the domestic production capacity continue to expand in the next two years?
Mr. Qu: As far as I know, the overall annual production capacity of aluminum fluoride in China is 1.3 million tons in 2024, of which the capacity for LBD is about 100,000tpy, stable from last year, but the operating rate of LBD aluminum fluoride is high, more than 90%. In the next two years, new projects will focus on HBD aluminum fluoride and are mainly distributed in Xinjiang and Inner Mongolia, with an annual capacity of 150,000t and 90,000t respectively. In contrast, the annual capacity for LBD aluminum fluoride is expected to decrease to about 80,000t in the next two years, as the profit margin for aluminum fluoride production is lower than that for hydrogen fluoride by using fluorosilicic acid, and some plants may switch to hydrogen fluoride production.
Asian Metal: What is the current situation and development prospect for LBD aluminum fluoride in China?
Mr. Qu: Chinese domestic electrolytic aluminum manufacturers give priority to the stability of aluminum fluoride supply, so the demand for LBD aluminum fluoride will remain stable in the next two years, and LBD aluminum fluoride producers would maintain sales and production balance. But the price gap between LBD aluminum fluoride and HBD aluminum fluoride may narrow, which is expected to drop to around RMB1,000/t (USD138/t).
Asian Metal: What is your company's main sales direction? What is the proportion of long-term contract and spot sales?
Mr. Qu: At present, we mainly sell to aluminum smelters in Shandong and Gansu by spot sales, and negotiate the price every month.
Asian Metal: As domestic competition intensifies, does your company have any plans to expand overseas market?
Mr. Qu: At present, the quality of aluminum fluoride produced by our company has been fully recognized by foreign customers and can meet their demand. Some foreign customers hope to sign long-term contracts with us, and it is expected that the export proportion may increase to about 30% next year. In addition, the price of LBD aluminum fluoride in China is lower than the price in Europe, and I think the export opportunity is favorable.
Asian Metal: What are your suggestions for the healthy development of domestic aluminum fluoride industry?
Mr. Qu: At present, the domestic aluminum fluoride industry profits are poor, and the price is largely driven by costs. The industry entry threshold is very low, so it is very easy for oversupply. For a healthy industry, I think firstly relevant official departments of China should introduce a capacity restriction policy; secondly, producers should also be self-disciplined to maintain a reasonable supply and profit margins.
Asian Metal: Finally, wish your company a breakthrough in overseas market next year!
Mr. Qu: I hope to establish good cooperative relations with overseas enterprises through Asian Metal platform. Thank you very much for this opportunity!
