Magnesium market to keep seeing bullish outlook in summer break
----Interview with Daniel Chu Sales Director Yulin Tianlong Magnesium Industry Co., Ltd.
Established in 2002, Yulin Tianlong Magnesium Industry Co., Ltd., integrating production and sales of magnesium metal, ferrosilicon and pure carbon, is a leading stockholding private company in terms of scale, profit and export in Chinese magnesium industry. Based on registered capital of RMB70 million and assets of RMB300 million, the company is able to produce 30,000t of magnesium metal, 25,000t of ferrosilicon and 300,000t of pure carbon every year, creating an annual output value of over RMB600 million and an annual tax payment of over RMB40 million. The company currently covers an area of about 200mu and owns more than 850 employees.
Asian Metal: Thanks for taking our interview, Mr. Zhu. Would you please give a brief introduction about the latest development of your company?
Mr. Zhu: Thank You. I am glad to have the opportunity to be interviewed by Asian Metal. Our plant was built in 2002 and mainly produces magnesium ingot, ferrosilicon and semi coke. With annual capacity of magnesium ingot 30,000t, ferrosilicon 25,000t and 300,000t of semi coke, our plant pays attention to the quality and service. In addition, thanks for the support of the long term support from government and other peers.
Asian Metal: As a large long-established magnesium cooperation, insiders give highly speak of Tianlong, please introduce your production advantages.
Mr. Zhu: Firstly, thanks for the good comments from other peers. Tianlong has developed many years and also experienced a lot in this industry. Our core competence is product's quality and good service.
Asian Metal: Entering 2018, Chinese magnesium ingot prices keep increasing, what are the main reasons?
Mr. Zhu: I think three factors would influence the market prices, which are production cost, stocks and supply-demand relationship. Entering 2018, on account of the firm ferrosilicon prices, Chinese magnesium ingot prices also hover at a high level. Meanwhile, as the main production area in China, most plants in Fugu have light stocks and some even have no spot goods to sell, which also give good support of magnesium ingot prices. From the whole view, the demand and supply is in a good state, which also makes the market run steadily. Given these situations, Chinese magnesium ingot prices keep rising in first half of 2018.
Asian Metal: Please analyses the market state and enterprise situations through the current demand and supply state?
Mr. Zhu: Regarding to the supply: restricted by the strict environmental protection inspection, most magnesium ingot plants only hold stable production to perfect their environmental equipment and some even suspend the production to deal with this issue. Therefore, the output of magnesium ingot in 2018 decreased against last year, especially in Ningxia and Shanxi. Meanwhile, regarding to the demand, downstream consumers and traders purchase the material on demand and the market runs steadily. Given these situations, Chinese magnesium industry is in a healthy state.
Asian Metal: With summer break coming, Chinese magnesium industry would start the off-season, how do you think the market trend in July and August and what are your solutions?
Mr. Zhu: In the recent years, summer break doesn't influence magnesium ingot too much. The reasons are as followings: for the export market, most sellers in the European market are traders. European traders keep purchasing the material during the summer break and the transactions are stable in July and August. As for the producers, we would keep light stocks and keep firm quotations during this period. In addition, most plants would reduce their production volume to start the equipment maintenance and the supply would decrease in hot summer as well. Given this situation, I still have the confidence in the market trend during the summer break time.
Asian Metal: What are the main factors to influence magnesium ingot market trend in the second half of 2018? Would environmental protection affect magnesium industry continually?
Mr. Zhu: Looking back to the past two years' magnesium market, most accidents and special factors would occur in the second half year. I believe the market supply of ferrosilicon and coal would be the main factors. Meanwhile, environmental protection also could be a main point at that time. Especially in September and October, the prices might fluctuate sharply caused by the supply of coal and strict environmental protection. The only thing we could do is prepare for the market anytime.
Asian Metal: Does your company consider starting the downstream products? How does Tianlong distribute the sales in domestic and overseas markets?
Mr. Zhu: As for the downstream products, we tried, but still think that we should focus on the magnesium ingot production now. In 2018, we have two expansion plans, one has been finalized in May and the second would finish in late August. Our annual capacity would achieve 30,000t at that time and most products could reach 95B%min.
As for the market sales, Chinese domestic market is still our main market. Of course, we also pay attention to the overseas market, if opportunities are good, we would increase the export volume as well
Asian Metal: Thanks again for taking our interview. Wish your company a better development in the future.
Mr. Zhu: Thanks. We also hope that Asian Metal sticks to the principle of objectiveness and timeliness to serve clients with better information about the magnesium market.
