Consolidate, innovate and sharpen competitive edge
----Interview with Zhuang Fang, General Manager of Ganzhou Sunny Non-ferrous Metals Co.,Ltd
Ganzhou Sunny Non-ferrous Metals Co.,Ltd is located in Ganzhou city, the transportation hub of tungsten resources in China and renowned as World Capital of Tungsten. Set up in August 2014, the company has a registration capital of RMB50 million and an occupation area of about 13.18 acres. It has its own mines and depth processing plants, and its annual sales volume of tungsten products amount to over 2,500t with sales amount over RMB300 million. The official website of the company is http://www.gzgygh.com.
Asian Metal: Would you please give a brief introduction about your company?
Ms. Zhuang: Our company is mainly engaged in trading, production, processing as well as import and export of tungsten products, molybdenum products and cemented alloys. Our tungsten products include tungsten concentrate, tungstic acid, ammonium paratungstate, blue tungsten oxide, yellow tungsten oxide, violet tungsten oxide, tungsten powder, tungsten carbide powder, ultra-fine tungsten powder, ultra-fine tungsten carbide powder, tungsten bar, tungsten wire, cemented alloy, tungsten heater element and so on. In particular, we have an annual capacity of 2,000t of tungstic acid, annual processing capacity of 2,000t of APT, annual capacity of 6,000t of blue, yellow and violet tungsten oxide, annual output of 2,000t of tungsten powder, annual capacity of 2,000t of tungsten powder, annual output of 1,000t of tungsten bar, and annual capacity of 20t of tungsten heater element. We have a complete industrial chain. At present we maintain full-capacity production of blue, yellow, violet tungsten oxide and tungsten powder. Meanwhile, we maintain good partnership with both Chinese and overseas enterprises on trading, production and processing of tungsten and molybdenum products. On outlook, beyond further improving all our products, we will focus upon development of products including fine-grained and coarse-grained tungsten carbide as well as cast tungsten carbide.
Asian Metal: How do you think of the ongoing price adjustments in the tungsten market?
Ms. Zhuang: In early this year, APT prices stood at around RMB110,000/t, which fell below real value of the product compared with its production costs. The starting point was relatively low and therefore it was natural for APT prices to rebound. By June, APT prices slowly rebounded to around RMB130,000/t, an increase of around RMB20,000/t within half of the year, but we think the upward movement in APT prices was slow. The main reason is that in China most of major consumers of APT are subsidiary powder plants of large-sized corporation groups, and there are about 10 such powder plants in China, most of which maintain a production-upon-sales model and therefore have a say upon pricing for raw materials. After June, with both Chinese and overseas market participants leaving for the summer holiday, the market witnessed mainly hand-to-mouth purchases. But at the same time, some producers and traders in the tungsten market began to restock raw materials for their future production or operation, thus boosting up prices in the market. Affected by government inspections on environmental protection and safety work, the majority of such enterprises maintained limited operating rates and therefore there was a supply shortage for their products. Their restocking of raw materials helped boosting up prices in the tungsten. In addition, with private capital entering into the market, in July and August APT prices rapidly moved up to over RMB180,000/t. With prices rising from RMB110,000/t in early this year to around RMB180,000/t in August, profit margins became considerable, though we did not rule out that there were some speculators who had already made profits. In sum, this round of price adjustments not only satisfied demand from powder enterprises for raw materials, enabling them to maintain normal production, but also provided a chance to traders to make profits in the near future. With both sides satisfied in their need, transactions in the market picked up and prices fell back. So prices in September were not favorable. Now market players concern about prices in November or even in the first half of 2018, and operate more cautiously. There is a possibility that prices may rebound by the end of this year but their increases would be limited to a controllable range.
Asian Metal: Currently, the spot supply of tungsten concentrate is limited, so what do you think we should do to find a way out of the dilemma?
Ms. Zhuang: Actually, insiders have gradually realized the importance of resources. I think two steps should be taken in order to tackle the problem. Firstly, producers should make wise decisions about the appropriate timing of purchases and establish mobile warehouses step by step to guarantee sufficient raw material stocks. Secondly, producers should reinforce their cooperation with both the domestic and foreign mines or even strategically become shareholders of mines.
Asian Metal: The export market of tungsten has improved this year, and could you give us a comparison between your company's export business this year and the same period last year?
Ms. Zhuang: First of all, we are still exporting in caution this year in order to ensure the product quality and brand image as we just started mass production last year, despite a great many of enquires for our products; moreover, we used to conduct export business through traders, but we hope we can promote our brand by ourselves. During the first seven months of this year, our exports were equivalent to 300t of APT, of which 30t was from tungsten carbide powder and tungsten power. In addition, we also concentrate on improving the product quality persistently while advancing the export business steadily. We expect to increase our exports to over 50% of the total output next year under the premise of the sound quality.
Asian Metal: What do you think of the market prospects of both the domestic and overseas tungsten markets?
Ms. Zhuang: Currently, market share expanding and scientific and technological innovation are the main theme of the tungsten market as the entire industrial chain of the market is under the process of intensification and integration. With tungsten prices fluctuating, risks coexist with opportunities and market participants could easily suffer losses. Moreover, we believe that the market competition would be more intense in the next ten years along with the development of the industry. Larger producers might focus on stabilizing their own development; medium-sized companies probably make breakthroughs and grow larger; but small-sized companies are likely to struggle to obtain market shares. The global economy is gradually recovering currently and is expected to develop to a new level in the future, so we are optimistic about the demand and market prospects. However, we still need to keep vigilant amid fierce competitions.
Asian Metal: How will your company respond to slim profits as it is a common problem?
Ms. Zhuang: Slim profits are indeed a serious problem faced by production enterprises, but the profit rate is the last thing producers should concern about as insiders must pay more attention to market shares, followed by the scale of production. It is an inevitable way to grow up, although it's painful. For our company, we should: first, ensure cash flow to maintain the normal operation of the company; second, ensure a proper scale of production to reduce production costs; third, strengthen scientific and technological innovation to enhance product competitiveness, and optimize the management structure to prepare for future developments.
Asian Metal: What the strengths of your products? And may we know the future strategic planning of your company?
First, we are able to meet the needs of customers in many ways thanks to diversified products and integrated industrial chain; second, our brand is well accepted in the market with excellent quality and exact market orientation; third, we can produce for high-end customers with raw materials they provide to give them a excellent experience of Guanghua's products.
Asian Metal: Thank you for accepting our interview and wish your company a bright future.
