----Interview with Changbo Shao
General Manager
Shandong Hengjia High-Purity Aluminum Industry Technology Co., Ltd.
Shandong Hengjia High-Purity Aluminum Industry Technology Co., Ltd. was established in September 2014, with its headquarters located in the Industrial Park of Guozhuang Village, Linchi Town, Zouping County, Binzhou City, Shandong Province. It is a private enterprise specializing in the research and development, production, and sales of new alumina materials, refractory raw materials, and nanomaterials. The main business includes the production, research and development, and sales of high-temperature alumina micro-powder, tabular alumina, and boehmite. Among them, tabular alumina and high-temperature alumina micro-powder are imported substitutes for refractory materials in the national refined steel industry.
Asian Metal: Hello, Mr. Shao! Welcome to the exclusive interview with Asian Metal. First of all, could you please introduce the basic situation of your company?
Mr. Shao: Shandong Hengjia High-Purity Aluminum Industry Technology Co., Ltd. currently has two production plants with a total annual production capacity of 160,000t. Among them, there are 5 ultra-high temperature shaft kilns with an annual output of 100,000t of tabular alumina and 20,000t of high-purity magnesia-aluminum spinel. There are also 2 103-meter-long tunnel kilns and 1 rotary kiln with an annual output of 20,000t of calcined α-Al2O3 micro-powder and 20,000t of active α-Al2O3 micro-powder. In addition, it also produces innovative products such as dense CA6, dense CA2, hydrated alumina, and highly dispersed alumina. The provincial special alumina research and development center is equipped with a variety of advanced testing devices. The center has over a hundred sets of XRD, XRF, SEM, laser particle size analyzers, specific surface area analyzers, and various high-temperature testing instruments, providing strong support for the company's quality control and research and development. Adhering to the corporate spirit of "persistently pursuing stability, prioritizing high quality, and creating excellence," the company has developed stable, high-quality, and cost-effective alumina refractory raw materials, which have been recognized by major refractory material enterprises worldwide.
Asian Metal: Since the third quarter of this year, the price of alumina has been continuously falling, putting great pressure on manufacturers. How does your company deal with the huge fluctuations in raw material prices?
Mr. Shao: Since the third quarter of this year, due to the oversupply of alumina, the price of alumina in China has continuously dropped from around RMB3,300/t to around RMB2,800/t. Currently, it is still slightly falling. This continuous price decline has brought challenges to our production and sales. To this end, we have taken two measures. On the one hand, the purchase price of the company's raw material, industrial alumina, is set based on the average monthly price of the three networks. The price is subject to market conditions. To reduce the risk of production suspension due to untimely raw material supply, we cooperate with multiple alumina producers and traders, and do not overly rely on a single source of raw materials. In the fourth quarter of last year, the price of alumina rose rapidly from RMB4,000/t to RMB5,800/t. Despite the tight supply, we did not suspend production due to the shortage of raw materials. On the other hand, by delving deeply into technological innovation, we have improved our production processes based on raw materials from different manufacturers and made technological adjustments to adapt to changes in raw materials, ensuring that the quality of our products remains consistently stable.
Asian Metal: Since the beginning of August this year, the price of tabular alumina has been continuously declining. What are the reasons for this? What are your predictions for the market in the fourth quarter?
Mr. Shao: Since the beginning of August, the price of alumina has been falling from around RMB3,250/t due to oversupply and has now dropped to around RMB2,800/t. As a result, the price of tabular alumina has also been affected and has continued to decline. On the other hand, due to the continuous decline in prices, the downstream buyer market is in a wait-and-see mood, reducing their purchasing plans. Meanwhile, sellers, in order to sell their goods quickly, are lowering prices to compete for orders, forcing prices to fall. The impact of the export situation also began to emerge at the end of August. The 20% tariff increase by the United States, the anti-dumping measures in Europe and the sharp rise in ocean freight rates caused by the Middle East war all affected the export volume and forced the price of tabular alumina to decline. In my opinion, in the fourth quarter, the price of alumina seems to be operating above the cost line and should be relatively stable. Correspondingly, the price of tabular alumina is also unlikely to fluctuate too much.
Asian Metal: Could you please introduce the current capacity distribution and utilization rate of the tabular alumina market?
Mr. Shao: Currently, the annual production capacity of tabular alumina in China is mainly concentrated in Shandong (42%), Jiangsu (21.7%), and Zhejiang (12.5%) regions. The annual total production capacity of tabular alumina in the country is approximately 1.12 million tonnes, with an operating capacity of about 590,000t and a capacity utilization rate of 52.7%. The global annual production capacity of tabular alumina is approximately 1.72 million tonnes, with China accounting for 65%. Since 2012, with the joint efforts of its peers, the production capacity and quality of China's tabular alumina have both rapidly improved. Currently, it has been recognized by major global customers and holds an important share of the global market.
Asian Metal: In the face of the current fierce market competition, what are your company's outstanding advantages?
Mr. Shao: Hengjia High-Purity Aluminum Industry has been dedicated to the production of special alumina products for refractory materials for over two decades, always emphasizing the stability of product quality and the research and development of new products. With the recognition and support of our customers, we have been growing steadily step by step and have now become one of the largest producers of special alumina products in China, with a production capacity of 160,000t. The variety of aluminum-based refractory raw materials is quite comprehensive. We can provide customers with a one-stop supply of tabular alumina, calcined α-Al2O3 micro-powder, active α-Al2O3 micro-powder, high-purity magnesia-aluminum spinel, CA6, CA2, hydrated alumina, highly dispersed alumina, etc. The company also attaches great importance to internal cost control and saves costs to benefit customers. Another company has a professional technical service team that can provide customers with technical services in all aspects, including raw material selection, refractory product proportioning, manufacturing, construction, and usage. In summary, it is: stable quality, complete variety, large scale, favorable price, and excellent service!
Asian Metal: In the face of a severe international market environment, do you have any plans to intensify the expansion of overseas markets?
Mr. Shao: Yes, as mentioned before, China's tabular alumina production capacity accounts for 65% of the international market. There is a huge market demand for China's tabular alumina products in mature markets such as Europe, America, Japan, and South Korea, while emerging markets such as Southeast Asia and the Middle East still have great potential for development. We have always attached great importance to the development of overseas markets. Stable product quality is the foundation for opening up international markets, and the spirit of contract is an essential quality for gaining the trust of international customers. I started my career as an agent for foreign brands. During the agency process, I learned about the innovation, stable quality, and integrity of foreign brands. Now we have the ability to present a good image of Chinese brands to international customers and bring honor to our country.
Asian Metal: Could you please analyze the current situation of the tabular alumina market and your outlook for the future market?
Mr. Shao: Currently, the tabular alumina market is in a stage of overcapacity and intense competition. Low profits, tight working capital, immature technology, and inability to produce continuously have greatly weakened the competitiveness of domestic tabular alumina enterprises. At present, five enterprises have completely halted production, with a total capacity of 212,000t, accounting for 19%. Eight enterprises have only utilized about half of their production capacity. In the future, tabular alumina enterprises need to focus on enriching and improving product quality, reducing overall costs, achieving long-term sustainable development through green and low-carbon production, enhancing the comprehensive competitiveness of the enterprise, and breaking through the shackles of "internal competition."
Asian Metal: What suggestions do you have for the healthy development of the domestic tabular alumina industry?
Mr. Shao: The government has recently issued some documents against internal competition, but they won't have much targeted effect on the small industry like tabular alumina, which is expected to remain competitive for several more years, relying on market forces to eliminate backward production capacity. Another approach is to actively integrate into the upstream and downstream of the industrial chain and be merged by upstream alumina plants or downstream refractory factories. This is conducive to the development of this small industry. Wish the industry a better and better development!
