Interview with Lin Jian, Chairman of Shanghai-based Huaxia Industry Co., Ltd.
Shanghai Huaxia Industry Co., Ltd was founded in July, 2003 with registered capital of 60million tons and a total area of 110 acre. Its major production facility and production staffs are part of the steel plant (military Industry) of Shanghai-based Sangang Co., Ltd. of Baogang Group. The company reformed its facilities through asset purchase and recovered its production at the end of 2006. It introduced strategic investors with the registered capital increased to RMB80million. The company, the second capable titanium plate producer in China, mainly deals with the production and sales of titanium plate. Major products are titanium sheet and titanium plate of several specs including 0.5mm to 20mm with an output of 5000 tons per year. Its market localization focused on pure titanium plate in high-end uses of board type heat exchanging titanium plate, electrochemical chlor-alkali industry titanium plate and civil titanium plates.
Lin Jian: New challenges appear in titanium market
----Interview with Lin Jian, Chairman of Shanghai-based Huaxia Industry Co., Ltd.
Asian Metal: Thank you for agreeing to our interview, Mr. Lin. And firstly please give us an introduction about your company.
Lin: Our company was founded in July, 2003 with a registered capital of 60million tons and a total area of 110 acre. Its major production facility and production staffs are part of the steel plant of Shanghai-based Sangang Co., Ltd. of Baogang Group. We reformed our facilities through asset purchase and recovered the production at the end of 2006. We introduced strategic investors with the registered capital increased to RMB80million. The company, the second capable titanium plate producer in China, mainly deals with the production and sales of titanium plate. We mainly focuses on pure titanium plate in high-end uses of board type heat exchanging titanium plate, electrochemical chlor-alkali industry titanium plate and civil titanium plates. Our major products are titanium plate and tube with large productions. 70% of the materials are supplied to domestic market and 30% are imported to Europe, the US and developping countries like South Africa and India. We have founded agencies in Brazil, the US, Europe, Australia, South Africa, South Korea and India for the purpose of negotiating with our clients.
Asian Metal: What do you think is the major problem during the development of titanium market currently?
Lin: Most products that China exports are primary low-tech finished products. Titanium consumption in China varied in different industries; defense industry and aerospace industry consume only 10-15% of titanium while civil industry consumes much titanium. However, the quality of titanium applied in civil industry cannot be guaranteed owing to outdated technology. A number of producers are still in the market despite the business sluggishness, resulting in a unique situation. Historically more participants enter into the market when prices fluctuate significantly in order to make much profit while the results are usually disappointing.
Asian Metal: As we all know, your titanium products are mainly supplied to European market, so what do you think are the differences between domestic market and European market?
Lin: Despite the sluggish market, European titanium demand keeps stable because the consumption in medical devices industry and aerospace industry takes a significant part of total titanium consumption. For example, marine and aerospace industry (represented by Boeing and Airbus) accounts for 30% of total titanium consumption in Europe.
By contrast, Chinese titanium market does not require much in quality. Titanium products manufacturers do not have rigorous requirements on specifications of raw material, which cannot guarantee the quality of finished products. In this case, many domestic ttanium products manufacturers are running below capacity with some in danger of going bankrupt.
AM: Huaxia Industry can maintain stable development even though titanium sponge market has kept sluggish since H2 last year. What advantages do you think the company has?
Mr. Lin: From the aspect of titanium for civil use, our company has made great efforts to develop new products, keep unsatisfied with current product categories and maintain steady relationship with our clients. The prices of main products keep at the same level of the prices in international market. We refuse to participant in low-end market and focus on titanium plate of special characteristics for special industries, under the theme of “having what the others do not have or perfect what others have” in order to obtain reputation and confirmation in titanium export market. We predicted the tight supply in 2003 and took decisive action to enter titanium market. The long-term view and accurate judgements on the market trend helped us develop rapidly during 2004-2008 and survive the economic crisis.
AM: Considering that titanium market is in chaos, what is your opinion on future development of titanium market?
Mr. Lin: I think that titanium market is unlikely to improve in 3-5 years and titanium enterprises will face new challenges. There are so many titanium enterprises in China, which makes the market of high investment with low output. The overall titanium market is expected to experience a reshuffle in 3-5 years when enterprises of small output and low quality will be eliminated. After that, there will be small quantity of titanium enterprises existing. Only in this way can titanium market develop healthily and obtain another round of rapid development.
AM: What plan does the company have in face of the new challenges?
Mr. Lin: Titanium consumption in aviation industry takes up only 30% of global consumption but productive value can reach as high as 90%. Those who want to win acceptance in titanium industry needs to do something in aviation industry. They undoubtedly can acquire huge profit from participating in this field. We plan to enter defense industry and aviation industry in the future to stay competitive. Only in this way, can we be a real titanium enterprise. I expect that the demand from aviation industry will exceed supply in 5 years. Demand of titanium from defense industry is slack now but is expected to experience a great increase in the long run. We have started to apply for certification and look forward to obtaining admission for Boeing and Airbus.
AM: Thanks again for accepting our interview!
Mr. Lin: Thank you!