----Interview with Baoqiang Cao
General Manager
Eastop SG Limited
Eastop SG Limited is a trading company specializing in the import and export of nearly 30 kinds of ferroalloy related products, including low-carbon ferrochrome, ferrosilicon, ferrosilicon manganese, silicon metal, magnesium metal, manganese flake, ferromolybdenum and so on.
Asian Metal: Hello Mr. Cao, welcome to the interview by Asian Metal. Please briefly introduce your company.
Mr. Cao: Thank you for the invitation. Our company, Eastop SG Limited (also named EASTOP), was established in 2003 in Chengdu, Sichuan Province. Our company is a trading company specializing in the import and export of nearly 30 kinds of ferroalloy. Our main products include low carbon ferrochrome, ferrosilicon, ferrosilicon manganese, silicon metal, magnesium metal, manganese flake, ferromolybdenum and so on. Our customers are mainly overseas steel mills, foundries, aluminum mills, top general trading companies in Japan and leading trading companies in Europe and India. We are one of the first companies approved by the Ministry of Commerce in 2009 to be included in the list of A-class Chinese ferroalloy Industry Export Licensees until the relevant national industry access regulations were abolished by the end of 2019. I myself have been trading ferroalloys since the 1980s, and have been cooperating with several Fortune 500 companies for more than 20 years.
Asian Metal: The mainstream export prices of Chinese LC ferrochrome kept increasing from USD2.20/Ib Cr FOB China in early December 2022 to USD2.60/Ib Cr in late January 2023. What do you think are the main reason for the price increase?
Mr. Cao: From my point of view, I think the prices increased mainly because of the exchange rate between RMB and USD and the higher chrome ore prices. In early December 2022, the exchange rate of RMB to USD was still above 7, but in early February 2023, it turned to about 6.70. At the same time, chrome ore prices began to increase, resulting in increased cost of ferrochrome. For example, the prices of South African chrome ore 40%min rose from about USD230/t CIF China in early December of 2022 to USD280/t CIF China by the end of January, 2023. Other metals’ prices also were affected by the changed exchange rate between RMB and USD during the period.
Asian Metal: How was the market demand performance during the period?
Mr. Cao: The supply and demand in the market affects the price. With the slow fall of the RMB to USD exchange rate after the Chinese New Year, the actual demand gradually decreased compared to that in last October and November. From the perspective of our company, the trading volume after the period decreased by 30% from that during the period.
Asian Metal: How do you think of the demand of overseas customers during February-March 2023?
Mr. Cao: According to the inquiries we received during the period, the demand still remained weak on the whole but remained stable from that in the fourth quarter of 2022. During the period, the trading volumes of LC ferrochrome, like other ferroalloy products, fell to the level before 2021. Customers basically purchased from hand to mouth during the period, while they either purchased in advance or delayed their purchases in early 2022, when the conflict between Russia and Ukraine just started. As far as we learn, major Japanese ports still saw stocks of Chinese and Russian ferrochrome which could support 2 to 3 months' consumption this year, while last year the situation was opposite.
Asian Metal: How do you comment on the market performance regarding price and demand in the second quater of 2023?
Mr. Cao: The market performance in the second quarter remained soft in general. From the perpective of supply, the output in Q2 in China also stood stable from that in Q1；While from the perspective of demand, the major regions such as China, India, Japan, and Europe witnessed relatively stable but weak demand and did not see demand recovery. So the mainstream export prices kept soft in the second quarter.
Asian Metal: Please share your prediction of price and demand outlook in Q3.
Mr. Cao: In my opinion, the LC ferrochrom export market would still see oversupply in Q3. From the perspective of supply, though European countries and some other countries claimed that they would not purchase Russian ferrochrome, Russian ferrochrome kept entering to the European and Japanese market since the beginning of the Russia-Ukraine conflict. At the same time, the supply from China to Europe also increased. From the perspective of demand, European market, as one of the major consumption markets, would enter the summer break soon. Therefore, if the prices of chrome ore and other raw materiasl, as well as other factors to influence the production cost, stand stable on the whole, the demand for LC ferrochrome would remain soft generally in Q3.
Asian Metal: What is your company's development plan in the future?
Mr. Cao: Our company has been exporting ferroalloy products for 20 years, and has established solid cooperation with our regular clients. Although the business owners of these companies changed many times, they still maintained stable cooperation with us because we pay great attention to credibility, responsibility, and timely delivery. Of course, we must thank these friends for their strong supports during the years. We always believe that the reputation is the key factor to maintain the sustanability of the company and we will keep woring on it. In addition, we plan to further strengthen our cooperation with our existing customers by continuing to provide competitive prices and professional, rigorous and trustworthy services, both in terms of product diversity and quantity. Secondly, we also hope to cooperate with more domestic and foreign partners. Finally, as China has added export tariff to the export of ferrosilicon, ferromanganese and ferrochrome, we believe that Chinese ferroalloy companies will also go abroad to establish the factories. We believe it will be great chances for us to follow up and to cooperate with these Chinese ferroalloy companies.
