Magnesia prices soar due to shortage of supply
----Interview with Li Xinggang, general manager of Hartley (Haicheng) Magnesite Company Limited
- Hartley (Haicheng) Magnesite Company Limited, located in Pailou town (home to magnesite), Haicheng city, Liaoning province, is a joint venture enterprise specializing in high purity magnesia production.
The company, owning 4 high temperature oil shaft kilns and 13 caustic calcined reflection kilns with an annual capacity of 200,000t for high purity caustic calcined magnesia and 180,000t for high purity magnesia, mainly produces MgO96.5%, MgO97%, MgO97.2%, MgO97.5% and other series of high purity magnesia products.
- Asian Metal: China canceled magnesia export quota in January 2017. What is your opinion about export magnesia market in the future? Do you have any plan to develop the export market?
- With China officially canceling magnesia export quota on 1ts January 2017, it is expected that improvements in various aspects such as exports increase, break up of monopoly, equal competition, quality enhancement, efficiency improvement and standardized management will be produced in magnesia production enterprises, resulting in more capability on selling their magnesia products abroad and participating in domestic and international economic integration. With accumulating many years of production experience for the export magnesium products in the past, our company has known quite well of the quality requirement of overseas customers, who welcome our products very much, but earlier deals have been closed through trading companies. By making the best of the opportunity of magnesia export quota cancelation this year, we particularly develop the export market as a crucial business field through adjusting the sales structure and increasing the proportion of exports to establish a stable and reliable international market for our magnesia as fast as we can. Therefore, we sincerely welcome international traders and customers to make extensive contacts with us.
- Asian Metal: With strict environmental inspections in Liaoning in 2017, the market is seeing tight supply, so what’s your response to maintain customers?
- Enterprises discharging pollution beyond standards severely in Pailou district, Haicheng, has been hindering the target of green development for a long time. Since February, 2016, with a highly-developed sense that environmental-friendly production is a legal obligation of our generation to be fulfilled as well as a social responsibility to be completed, we volunteered to undertake investment risks before the implementation of forced mechanism by the government. Through the joint efforts with the relevant environmental protection department of almost a year long, we took the lead in completion two environmental-friendly projects of high purity kiln and caustic calcined kiln of dust removal, desulfurization, and denitration, which was listed as the demonstration project generalized by the government. Therefore, we did not suspend magnesia production for environmental inspections which could lead to tight supply. We are now in the normal steady production with discharges up to standards, providing sufficient material to our customers.
- Asian Metal: With the government having been taking drastic steps in environmental inspections since the very beginning of 2017, what is your view on the environmental protection trend in the whole year of 2017?
- Through the practice of our advanced approach to environmental protection, we have realized we must be strongly aware of the importance of environmental governance in the first place, and then are able to act voluntarily with consciousness and self-discipline. If an enterprise dares to put money into environmental governance regardless of its cost and fund risk, what it gets in return is that the long-term production environment will be improved and human pollution reduced, achieving the tangible social ecological benefit and environmental benefit. With the government putting greater pressure on environmental inspections and the masses realizing the importance of environmental protection, the environmental protection tendency of this year are as follows: more normalized environmental regulation, more standardized environmental management and governance effect.
- Asian Metal: Domestic magnesia prices continued to go up after the Spring Festival. What is your opinion on this issue? What do you think of the price trend of magnesia in the future?
- The phenomenon of continuous rising prices for magnesia products currently is not only a rational regression and the result of supply-side structural adjustment in ore mining and processing industries, but also is the fruit of enterprises’ production mode transformation. With the magnesite industry developing healthily and orderly, I expect the upward trend will gradually cool down, and prices for the material will be more consistent with those in downstream steel and cement markets, according with development laws of the market.
- Asian Metal: If environmental inspections become less strict, will magnesia prices go up and down significantly?
- The continuous increasing prices for magnesia are seemingly caused by environmental inspections, but actually are the result of supply-side structural adjustment in the magnesite industry and enterprises’ production mode transformation. As a labor-intensive industry, the magnesia company has been operating in meager profit or loss situation with outdated technology and inadequate innovation ability. Especially in the contradiction of oversupply on the long-term basis, the company has maintaining production with cost higher than products’ prices, becoming the most difficult industry in the whole chain from magnesia to the end consumers. With the normative development of magnesite industry rather than the less strict environmental inspections, magnesia prices will move more rationally in the market, so they will not go up and down significantly.
