Huang Mingxing: Global ferrotungsten demand remains sluggish with diversified products offering a way to develop
----Interview with Huang Mingxing, Chairman of Vietnam Youngsun Tungsten Industry Co., Ltd.
Company Profile: Vietnam Youngsun Tungsten Industry Co., Ltd. was established in 2006, occupying an area of 25,000 square meters, with fixed assets of USD60 million. Its ferrotungsten melting furnace has a capacity of 1500KVA alongside an advanced and automated production line with computer controlled operation, mechanical digging and water cooling systems. The company mainly produces ferrotungsten and exports to Europe, Japan, South Korea and the United States.
Asian Metal: Hello, Mr. Huang, thanks for accepting this interview. First, could you please give us a brief induction to your company’s main business?
Huang: We’re focused on producing ferrotungsten with an annual capacity of 3,600t and began to construct a powder plant in September 2015, which will mainly produce tungsten acid products, APT, blue tungsten, yellow tungsten and tungsten carbide powder. The design capacity of the new plant is 3,000tpy.
Asian Metal: Many ferrotungsten producers are indicating that current transaction prices for European ferrotungsten are lower than their actual costs of production. What do you think of this?
Huang: As the quality requirements for ferrotungsten from European end users are different, some inferior quality ferrotungsten produced by methods other than the furnace process are flowing into the European market; meanwhile, ferrotungsten illegally exported from China at low prices also has an impact on the market. However, European traders hold limited stocks in the spot market and market prices will return to their normal levels gradually when the stockpiles obtained at lower prices are sold out. Currently, prices for ferrotungsten are indeed lower than the costs of production, but the price inversion will not last long.
Asian Metal: A succession of Chinese producers has entered the international market since China officially cancelled the export tariff on ferrotungsten in May 2015. Will this have a big impact on the global ferrotungsten supply pattern?
Huang: The cancellation of the export tariff did have a great influence on us and the global ferrotungsten supply pattern has also changed a lot. At least 80% of the ferrotungsten supply on the international market came from Vietnam during 2012 and 2013, but ferrotungsten of Chinese-origin has gradually been entering the international market since the Chinese government removed the 20% export duty imposed on ferrotungsten in May of this year. Our supply volume is expected to drop by 60% compared with previous years.
Asian Metal: Demand within the high-speed steel industry is soft this year withthe global economy remaining weak. Will market demand for ferrotungsten pick up early next year?
Huang: Although the global economy has remained weak this year, global demand for ferrotungsten has actually increased compared with last year. Japanese market demand is relatively steady with the largest user needing nearly 800t of the material this year, accounting for more than 50% of the total market demand in Japan. The European market has various sources of demand for the material with average demand exceeding 100tpm. In view of the unstable situation around the world, many countries have increased their use of the material in military sectors. Meanwhile, demand for high-speed steel will edge up with the recovery of the global economy. Therefore, market demand for ferrotungsten will also rise. It is expected that the ferrotungsten market will gradually pick up next year.
Asian Metal: What is the biggest challenge for your company in the near future?
Huang: For us, the ferrotungsten produced by the outside furnace process still has a big impact on us. Prices for this kind of ferrotungsten are cheaper as its production costs are relatively low, so some users purchase it to reduce costs. Besides, some European steel mills have become accustomed to using its price to force down the prices for ferrotungsten produced by the electrolytic process. Some steel mills even purchase the cheaper material produced by the outside furnace process as their quality requirements are not high. However, the ferrotungsten produced by this process contains relatively high levels of impurities. We believe clients will finally choose the high-quality ferrotungsten.
Asian Metal: What’s behind the drastic plunges in the global tungsten market seen over recent years? What kind of measures will the company take to maintain profitability?
Mr. Huang: The prices of various metals are in decline amid a sluggish global economy, and tungsten is no exception. First of all, we must reduce purchase costs; for example, consuming low grade ore to produce catalysts and diversifying, away from only one product-ferrotungsten- into downstream products, including APT. blue tungsten, yellow tungsten and tungsten carbide powder.
Asian Metal: The tungsten market is confronted with disorderly price competition. Some plants continue to lower quotations to win orders, which are extremely rare in the market. How do you see this problem? What measures should be taken to avoid this kind of price war in the future?
Mr. Huang: Disorderly competition can harm the ferrotungsten market, but this situation won’t last long, because the ferrotungsten industry will isolate high-end consumers from low-end consumers in the future. Ferrotungsten produced by the out-furnace smelting process can only be used to produce low-end products. Our 80-C, JIS ferrotungsten is used to produce high grade special steel, so high-end consumers will be our target clients in the future.
Asian Metal: What caused the price surge in the European ferrotungsten market in late December, and will it last?
Mr. Huang: In early November, the Chinese government decided to build stockpiles of tungsten concentrate. On hearing the news, producers started scaling down output and lifted prices. Boosted by the price rises in the Chinese market, the global tungsten concentrate market soared in price as well, driving up the production cost of ferrotungsten. As a ferrotungsten producer, we had to lift our prices accordingly. At that time, European steel plants were cautious about purchasing and traders adopted a negative view of the market outlook. In order to free up cash, traders undersold their stocks. Therefore, in late December there were just a small number of stocks left in traders’ hands. Steel plants re-entered the market to make purchases before Christmas, but supply was very tight in the spot market, thus driving up quotations dramatically. Currently, we’re not providing quotations in the market because we don’t hold much in the way of stocks either. We anticipate that the price of ferrotungsten will continue to rise in the near term due to firm raw material prices and tight spot supply.
Asian Metal: Thank you for granting us this interview. We wish your company a better future.
