12th Rare Earth Summit
May 27-28, 2021
Hangzhou, Zhejiang, China
11th Aluminum Raw Materials Summit
May 20-21, 2021
Hangzhou, Zhejiang, China
9th Magnesium Summit
April 15-16, 2021
Hangzhou, Zhejiang, China
13th World InBiGeGa Forum
March 25-26, 2021
Hangzhou, Zhejiang, China
7th World Antimony Forum
June 13-14, 2019
Changsha, Hunan, China
7th Refractory & Abrasive Materials Summit 2019
May 23-24, 2019
Qingdao, Shandong, China
10th Aluminum Raw Materials Summit
May 16-17, 2019
Zhengzhou, Henan, China
11th Rare Earth Summit
May 9-10, 2019
Qingdao, Shandong, China
8th Magnesium Summit
April 11-12, 2019
Zhuhai, Guangdong, China
12th World InBiGeGa Forum
March 14-15, 2019
Zhuhai, Guangdong, China
6th World Manganese & Selenium Forum
May 21-22, 2018
Hainan Sanya, China
Interview with Chai Jiong, General Manager of Shandong Zhaohe New Materials Co., Ltd.
Chai Jiong: Aluminum fluoride market still needs integration despite shortlived rebound
----Interview with Chai Jiong, General Manager of Shandong Zhaohe New Materials Co., Ltd.
Asian Metal: Thank you for accepting our interview. After declining for several months, aluminum fluoride price finally rebounded in October. How long do you think the price increase will last for and what about the increase range?
Chai: I think the price may not go up significantly and it may increase by RMB200-300/t (USD32-48/t). Now we conclude deals at RMB6,600/t (USD1,059/t) ex works and the price is lower when dealing with the long-term contracts of Weiqiao Group. One reason that prevents the price from increasing is that Chalco keeps lowering the price, which provides a reference for other smelting plants. Although the new aluminum ingot capacity in Xinjiang will release gradually, the demand for aluminum fluoride will not increase sharply.
Asian Metal: What do you think is the reason for the price rebound?
Chai: As we all know that many aluminum fluoride producers are suffering great losses, more plants will halt production if the price remains declining. There are three reasons why the producers keep normal production. Firstly, they need to finish the contracts they signed before to maintain the fixed customers. Secondly, they should maintain employees' work. At last, there is some pressure from the government. Meanwhile, the declining stock is also one important reason. According to our statistics, the stocks in Chinese domestic market are around 20,000-30,000t, which are not very large.
Asian Metal: Aluminum fluoride market has been moving down since early this year and most producers suffer great losses. How about the production cost?
Chai: Our production cost now is RMB6,800-6,900/t (USD1,091-1,107/t) and we suffered a lot when the market price dropped to RMB6,300/t (USD1,011/t) last month. The average production cost in Shandong is higher than RMB6,500/t (USD1,043/t). Relatively higher sulfuric acid price puts Shandong producers at a disadvantage while prices of other raw materials like fluorspar and aluminum hydroxide are almost the same as other production bases in South China. Although Shandong has many sulfuric acid plants, the demand is very large, so the price is usually RMB200/t (USD32/t) higher than that in South China.
Asian Metal: As the main producing area of aluminum fluoride, what is the advantage of Shandong?
Chai: With some large-scaled smelting plants in Shandong such as Weiqiao Group and Xinfa Group, the demand for aluminum fluoride is satisfactory. We have advantage in the transportation cost. For example, the freight is only RMB30/t (USD4.8/t) when we deliver the products to Weiqiao Group. We also have some customers in West China, but the profit is lower. So Shandong is our primary market with market share of 60-70%. Besides, most of the smelting plants in Shandong have self-supply power plants, so they do not suffer great losses.
Asian Metal: What is the annual production of your company?
Chai: We have two production lines. The original one has the capacity of 20,000tpy and the other one, which is empowered with the capacity of 30,000tpy, came on stream in the second half of 2011. Currently, our plant is running at full capacity of 50,000tpy, while now we halt the old production line due to the equipment maintenance. We will soon resume the rest production. We plan to transform the new capacity of 30,000tpy to produce hydrofluoric acid, the market of which is better than aluminum fluoride.
Asian Metal: The overcapacity is one of the most important reasons why the market remains weak. But there are still new capacities under construction in Hunan and Shanxi. What do you think is the reason?
Chai: Those plants that have new capacities may have their own fluorspar ore and sulfuric acid plants. So they have advantage in raw materials. Besides, the production technology of aluminum fluoride is very simple, so many producers choose to produce aluminum fluoride.
Asian Metal: Facing the sluggish market, what is the outlet of the aluminum fluoride enterprises?
Chai: Since the technical threshold of aluminum fluoride is too low, the overcapacity is getting more serious. We are looking forward to the new policies unveiled by the government which can limit the total capacity. Meanwhile, if the fluorspar price can climb up to a favorable level such as RMB2,500/t (USD401/t), the aluminum fluoride price can get support. While if the government removes the fluorspar export tax, the price of this material may decline, since foreign importers may take the advantage to crack down the price. In the long run, aluminum fluoride market still needs integration.
Asian Metal: Thanks again for your cooperation. Respectfully wish your corporation progresses day by day.
Wei: Thank you!
Chai: I think the price may not go up significantly and it may increase by RMB200-300/t (USD32-48/t). Now we conclude deals at RMB6,600/t (USD1,059/t) ex works and the price is lower when dealing with the long-term contracts of Weiqiao Group. One reason that prevents the price from increasing is that Chalco keeps lowering the price, which provides a reference for other smelting plants. Although the new aluminum ingot capacity in Xinjiang will release gradually, the demand for aluminum fluoride will not increase sharply.
Asian Metal: What do you think is the reason for the price rebound?
Chai: As we all know that many aluminum fluoride producers are suffering great losses, more plants will halt production if the price remains declining. There are three reasons why the producers keep normal production. Firstly, they need to finish the contracts they signed before to maintain the fixed customers. Secondly, they should maintain employees' work. At last, there is some pressure from the government. Meanwhile, the declining stock is also one important reason. According to our statistics, the stocks in Chinese domestic market are around 20,000-30,000t, which are not very large.
Asian Metal: Aluminum fluoride market has been moving down since early this year and most producers suffer great losses. How about the production cost?
Chai: Our production cost now is RMB6,800-6,900/t (USD1,091-1,107/t) and we suffered a lot when the market price dropped to RMB6,300/t (USD1,011/t) last month. The average production cost in Shandong is higher than RMB6,500/t (USD1,043/t). Relatively higher sulfuric acid price puts Shandong producers at a disadvantage while prices of other raw materials like fluorspar and aluminum hydroxide are almost the same as other production bases in South China. Although Shandong has many sulfuric acid plants, the demand is very large, so the price is usually RMB200/t (USD32/t) higher than that in South China.
Asian Metal: As the main producing area of aluminum fluoride, what is the advantage of Shandong?
Chai: With some large-scaled smelting plants in Shandong such as Weiqiao Group and Xinfa Group, the demand for aluminum fluoride is satisfactory. We have advantage in the transportation cost. For example, the freight is only RMB30/t (USD4.8/t) when we deliver the products to Weiqiao Group. We also have some customers in West China, but the profit is lower. So Shandong is our primary market with market share of 60-70%. Besides, most of the smelting plants in Shandong have self-supply power plants, so they do not suffer great losses.
Asian Metal: What is the annual production of your company?
Chai: We have two production lines. The original one has the capacity of 20,000tpy and the other one, which is empowered with the capacity of 30,000tpy, came on stream in the second half of 2011. Currently, our plant is running at full capacity of 50,000tpy, while now we halt the old production line due to the equipment maintenance. We will soon resume the rest production. We plan to transform the new capacity of 30,000tpy to produce hydrofluoric acid, the market of which is better than aluminum fluoride.
Asian Metal: The overcapacity is one of the most important reasons why the market remains weak. But there are still new capacities under construction in Hunan and Shanxi. What do you think is the reason?
Chai: Those plants that have new capacities may have their own fluorspar ore and sulfuric acid plants. So they have advantage in raw materials. Besides, the production technology of aluminum fluoride is very simple, so many producers choose to produce aluminum fluoride.
Asian Metal: Facing the sluggish market, what is the outlet of the aluminum fluoride enterprises?
Chai: Since the technical threshold of aluminum fluoride is too low, the overcapacity is getting more serious. We are looking forward to the new policies unveiled by the government which can limit the total capacity. Meanwhile, if the fluorspar price can climb up to a favorable level such as RMB2,500/t (USD401/t), the aluminum fluoride price can get support. While if the government removes the fluorspar export tax, the price of this material may decline, since foreign importers may take the advantage to crack down the price. In the long run, aluminum fluoride market still needs integration.
Asian Metal: Thanks again for your cooperation. Respectfully wish your corporation progresses day by day.
Wei: Thank you!