Ye Chiu Group Shelves Construction of New Malaysian Plant

Malaysia based secondary alloyed aluminium maker, Ye Chiu Group, which has major production base in China, shelves construction start of new Malaysian plant while the firm planned to start the project in January. The firm still negotiates with Malaysian government to secure supply of natural gas. The Chinese operating company of Ye Chiu Metal (Taicang) keeps high operation rate at monthly 13,000 tonnes under strong demand while the firm rejects some order due to limited availability of aluminium scrap.

The firm tried to agree with Malaysian government for the supply by mid-December 2009. However, the negotiation still continues due to the short supply condition. The existing Malaysian plant increases the production to 6,000 tonnes in January, which is 1,000 tonnes higher than December 2009, when the demand recovers in Southeast Asia after slump period.

Ye Chiu Metal (Taicang) gets more orders from die-casting makers and automotive parts makers in January. The firm recognizes many users try to build inventory before Chinese New Year holiday while the domestic demand keeps firm in China, which became world largest automobile market in 2009 topping USA. However, the firm cannot meet all of the orders due to short supply of aluminium scrap while the firm keeps monthly 5,000 tonnes of AD12.1 grade export to Japan.

Ye Chiu Metal (Taicang) is under third phase of expansion. The firm expands 2 melting furnaces completing the expansion for one in March and for another in May. The firm plans to increase the monthly production to 20,000 tonnes in and after June. However, the firm has to secure aluminium scrap to increase the production searching competitive material in traditional US market and Japan.

The firm also tries to improve the profitability while the firm cannot pass higher cost fully on the selling price. The margin is only 2-3% due to higher cost for aluminium scrap, electricity and metallic silicon.