----Interview with dizhang
Sales Director
Linghai Mofeng Metal Smelting Co.,Ltd.
Mofeng Enterprise is invested by Shenzhen Mofeng Investment Co., Ltd., and integrated the resources of Sing Horn which was used to be the main manufacturer of chrome series including chrome metal and chrome salt. Mofeng Enterprise is located in Jinzhou, Liaoning province and is a professional producer of chrome metal, high purity chrome metal and chrome metal powder.
Asian Metal: Hi Mr. Zhang, thanks for joining us. Please introduce your company briefly.
Mr. Zhang: Mofeng Enterprise is a professional producer of chrome metal, high purity chrome metal and chrome metal powder in Jinzhou area, and we have established Tupran Lianda Metal and Chemical company with a joint venture with Turpan, Xinjiang. Now we have a complete industrial chain of chrome series of “chrome ore - sodium dichromate - chrome oxide - chrome metal - high purity chrome metal”. Let me introduce our three companies in detail. Firstly, Linghai Mofeng Metal Smelting, which is a chrome metal production company established in August 2019 after Shenzhen Mofeng Investment's merging and reorganization of Sing Horn Chrome. The company has advanced smelting equipment with an annual production capacity of 10,000 tons of chrome metal; Secondly, Jinzhou Xin Peak New Material, which was established in August 2019, can produce high purity chrome metal, high purity chrome metal powder, target grade chrome metal powder and chrome metal powder. The main product high purity chrome metal, with an annual production capacity of 1,000 tons and monthly output of around 80 tons, has entered the international market with advanced producing level. Thirdly, Tupran Lianda Metal and Chemical, which was established in May 2020, can provide 60,000 tons of sodium dichromate annually. In addition, it can also provide around 1,500 tons of chrome oxide and 60 tons of electrolytic chrome metal flake each month.
Asian Metal: Why did the prices of chrome metal in Chinese market increase dramatically from RMB60,000/t in September 2021 to around RMB75,000/t in October 2021?
Mr. Zhang: Although the prices of chrome metal increased too fast in September to October 2021, the demand was still very weak. I think it is mainly because of the increased prices of raw materials including chrome oxide green, soda ash and sulphuric acid etc. In the second half of 2021, the production of chrome oxide green in South China was affected by the environmental protection. The producers of chrome oxide green in Hubei and Sichuan areas both increased the investment in environmental protection, which indirectly increased the cost of chrome oxide green. In addition, the prices of soda ash increased by 40% from February 2021 to June 2021 which directly increased the cost of chrome oxide green. Therefore, the prices of chrome oxide green increased from RMB25,000/t in September 2021 to RMB35,000/t in October 2021.
Asian Metal: What are the impacts of the increased prices on your company and the industry?
Mr. Zhang: After the price increased, the market sees fierce competition and increased production. Because the production process of chrome metal is relatively simple and the production cycle is short, many workshop companies with irregular production have entered the market which has a great impact on our sales. Due to the low production cost (including labor cost and enterprise operation cost) of workshop companies, the prices of chrome metal in workshop companies will be RMB2,000-3,000/t or even RMB4,000/t cheaper than us, resulting in a decrease of 50% in our sales from September to October 2021.
Asian Metal: How was the market demand of chrome metal during the period?
Mr. Zhang: l think the market shows weak demand and it is because of the following two reasons: Firstly, the customers could not easily to accept the prices after the prices increased rapidly. The market prices were chaos in that period and the prices advantage of workshop enterprises further declined our sales in September and October. Our sales decreased by 50% from September to October 2021; Secondly, from the downstream perspective, customers were also affected by the electricity control in October 2021, resulting in a decline of purchasing power.
Asian Metal: Please introduce what industries your customers are from? What are the changes in different industry demand?
Mr. Zhang: Our customers mainly come from three industries including superalloy, welding material and foundry. First of all, around 70% to 75% of our customers are in superalloy industry. In previous years, China mainly relied on imports of superalloys, but there are many large superalloy companies in China now. We believe that the superalloy industry is only in the early stage of development. At present, it is estimated that the market value of about 20 billion has not been fully released. Secondly, 25% to 30% of our customers are in welding material and casting industry. At present, we can produce around 400 tons of chrome metal each month, 90% of which are produced as chrome metal lumty. But 60-70% of customers in welding industry need to consume metal chrome powder. Therefore, our company plans to focus on producing metal chrome powder in 2022 to further expand the market share of metal welding industry.
Asian Metal: Please briefly comment on the prices of chrome metal in November and December 2021 and please predict the price trend in the first quarter of next year?
Mr. Zhang: The market shows weak demand in November and December 2021. The prices kept at RMB71,000-73,000/t in November, and the price started to decrease in December because of the weaker demand. We predict that the prices would decrease further in the first quarter of 2022 due to the weak demand, and finally the price will stay at RMB60,000-65,000/t.
Asian Metal: Please tell us the development plan of your company in 2022.
Mr. Zhang: Firstly, we will focus on chrome metal powder industry to expand the market share of chrome metal powder; Secondly, we will develop the customized services in 2022 to satisfy different customers; Lastly, we will pay more attention on export market of high purity chrome metal. In 2021, we exported around 70% of high purity chrome metal and we sold the rest of them domestically.
