----Interview with Zongkun Wang
General Manager
Wenxi Yinguang Zhengfan Magnesium Co.
Wenxi Yinguang Zhengfan Magnesium Industry Co., Ltd. is a subsidiary of Wenxi Yinguang Group. It was founded in 1998 as a private enterprise integrating mining, calcium metal smelting, calcium deep processing, aluminum powder processing, and magnesium powder processing. As a joint-stock enterprise, it has been the vice-president unit of the China Calcium Industry Association for many consecutive terms.
Asian Metal: Hello, Mr. Wang! Welcome to the interview by Asian Metal. Please introduce your company's business briefly.
Mr. Wang: Hello, I am honored to accept the exclusive interview of Asian Metal! Zhengfan Magnesium Industry has 6 branches, covering an area of 600 acres, with annual production capacities of 38,000 tons of metallic calcium, 89,000 tons of calcium aluminate, 10,000 tons of calcium wire, 3,500 tons of cored wire, 3,600 tons of calcium granules, 2,000 tons of high-purity metallic calcium and 5,000 tons of various alloys. The output of metallic calcium and calcium aluminate accounts for 56% of the national output. Our military-level magnesium powder has been supplied to military industrial enterprises for more than 20 years. The company's comprehensive strength ranks first in the country for many years. .
Asian Metal: Chinese calcium metal market moved smoothly in 2022. Entering the first half of 2023, Chinese calcium metal market suffered heavy pressures on the price inversion, what are the main reasons for continuous low prices?
Mr. Wang: Exactly. Since early 2023, the metallic calcium industry has suffered heavy losses. I think there are two reasons for the continued inversion of prices. First, steel prices continue to weaken under the suppression of the sluggish economic environment, leading to continuous production suspension or reduction. As 90% of metallic calcium-related products are consumed by steel mills, the demand shrunk accordingly by nearly 30%. This is the fundamental reason for the continued inversion of calcium metal prices. In addition, metallic calcium is easily oxidized and difficult to preserve. Suppliers continued to lower their prices to compete for orders so as to clear their stocks, resulting in the continued low prices of metallic calcium products. Besides, coal and aluminum ingots contributes the main part of the production cost of metallic calcium. The price decline of coal and aluminum ingot in the first half of 2023 is also the reason for the low prices of calcium metal. In the first half of the year, calcium metal companies generally faced the pressure of cost inversion and witnessed a loss of RMB2,000/t (USD273/t) on the whole.
Asian Metal: You mentioned that calcium metal is easily oxidized. As a special metal, what are the storage environment, packaging, and transportation requirements for calcium metal?
Mr. Wang: Calcium metal is classified as dangerous goods. It should be stored in a dry, ventilated, and cool place to avoid moisture and heat. The suitable storage temperature is 15℃-25℃. In addition, metallic calcium should be avoided contacting with water, because water will oxidize its surface. Therefore, the storage environment should be kept dry and the relative humidity should not exceed 50%. In terms of packaging, metallic calcium can be packaged in plastic bags and aluminum foil bags. These materials can effectively isolate air and moisture and prevent oxidation reactions. Meanwhile, the requirements for sealing materials are very high, namely the packaging materials must have a certain degree of corrosion resistance to prevent the metal calcium from reacting with the packaging materials. In terms of transportation, metallic calcium can be packed in iron barrels or plastic barrels. Usually, it is mostly shipped by car. During transportation, attention should be paid to moisture, sun protection and collision prevention.
Asian Metal: The mainstream prices for calcium metal in China rebounded since early August, how do you see the reasons for the price increase?
Mr. Wang: As prices continue to fluctuate at low levels in the first half of 2023, calcium metal plants kept suffering from price inversions. Some producers cut production to avoid inventory accumulation, some calcium metal plants reduced production due to the heavy pressure of environmental protection inspection. The production reduction made the supply excess of calcium metal ease and the prices started to rebound. In addition, as the price increase of aluminum ingot pushed up the production cost, producers lifted their prices accordingly. Even the prices started to rise, the profit for most producers was only about RMB500/t (USD68/t).
Asian Metal: How do you anticipate the trends of price, supply and demand of calcium metal for the coming two months of 2023? How could calcium metal producers guarantee basic profits under the dim market?
Mr. Wang: Entering late 2023, we still lack confidence in the full recovery of the steel industry. However, due to insufficient operating rates of producers and relatively tight market supply, market prices will be supported in the next two months, during which the mainstream prices would fluctuate at RMB19,500-20,500/t EXW D/P. During this period, calcium metal producers would keep facing pressures of market demand and production cost. In my opinion, the only way for producers to guarantee profits is to maintain low operating rates.
Asian Metal: What about the demand in the export market in the past three quarters in 2023? Will the export market see more deals in Q4?
Mr. Wang: In the past three quarters of 2023, Chinese calcium metal export market suffered heavy pressure under the gloomy economy and moved slowly on the whole. The total export volume only reached about 17,134t. As for us, 80% of our calcium metal and related products are sold to domestic customers, and another 20% are directly exported to foreign countries. Entering the last two months of 2023, Chinese calcium metal market would pick up supported by concentrated buying activities from foreign clients before the Christmas holiday. The mainstream Chinese calcium metal export prices would hover at the range of USD2,800-2,900/t FOB China and the the market would see more deals compared with the situation in the past two months. We foresee an demand increase of about 5% MoM.
Asian Metal: As a leading enterprise in the calcium industry, how is your company's progress on promoting the deep processing development?
Mr. Wang: Our company is committed to the R&D and production of deep-processed calcium products to achieve the company's transformation and leap-forward development goals. At present, the six extrusion production lines representing the development direction of China's calcium industry have all been put into operation. The company has formed a calcium processing system with complete categories and complete technology and has become the deep processing enterprise with the largest scale and the most complete varieties in the national calcium industry. Our company is playing a leading role in the transformation and upgrading of the city, province and even the country's metallic calcium industry.
Asian Metal: Thanks for your sharing and we wish Zhengfan a better future!
Mr. Wang: Thank you for the invitation for the interview with Asian Metal! I hope that Asian Metal will continue to provide timely, fair and comprehensive information for calcium metal industry.
