Bearish outlook for selenium dioxide market in Q4 2019
----Interview with Kang Nong
General Manager
Hunan Ruizhong New Material Co., Ltd.
- Founded in 2016 with a registered capital of RMB5 million (USD0.70 million), Hunan Ruizhong New Material Co., Ltd. is a high-tech enterprise specializing in sales of Ruizhong brand selenium dioxide. Adhering to the operation principle of "reputation first and quality priority", the company implements the customer-oriented business idea in a comprehensive manner, keeps improving business guidelines with advanced, legal and completed management systems and serve the customers sincerely by satisfying customers' requirements constantly with innovative management and services.
- Asian Metal: Thank you for accepting our interview, Mr. Kang. Firstly, please give us an introduction to the status quo of your selenium dioxide business.
- Mr. Kang: I'm very pleased to join your interview. Selenium dioxide is mainly used in manganese flake industry and it's also used in high-purity selenium production, electroplating, chemical raw material and other fields. We began to be engaged in selenium dioxide business in 2009, starting with trading activities. From 2013 on, we established long-term stable cooperation with upstream plants and closely participated in capital investment, product research, process optimization and comprehensive management in order to stabilize supply channels and improve product quality. Our regular monthly trade volume of selenium dioxide has kept stable at about 40-50 tons since H2 2016 and we have excellent customer base in downstream manganese flake market.
- Asian Metal: What are the differences between selenium dioxide of common brands and that from Jiangxi Copper and Vital Materials?
- Mr. Kang: Prices for selenium dioxide from Jiangxi Copper and Vital Materials are usually RMB3,000-5,000/t (USD423-705/t) higher than mainstream prices in Hunan market as products from these two companies are of relatively lower impurity content, higher purity and better dissolving efficiency. We also keep improving our product quality by widely accepting comments of customers and positively upgrading production process. In 2016, our selenium dioxide became a quality leader in Chinese market. Ruizhong brand selenium dioxide has been widely accepted by Chinese manganese flake producers and other end users.
- Asian Metal: The current Chinese selenium dioxide market is dim and prices have been showing a downtrend since May 2017. What are the main causes?
- Mr. Kang: Chinese selenium dioxide market saw the latest lowest price of RMB55,000/t (USD7,751/t) in May 2016 and the price went up to RMB300,000/t (USD42,278/t) by May 2017 in only one year, because Tianyuan Manganese made purchases in Chinese market and market players raised prices intentionally. In the recent two more years, Chinese selenium dioxide prices kept moving down as the market saw oversupply and Tianyuan Manganese didn't purchase from the market any more after building a selenium dioxide processing plant, which resulted in a sharp decline in demand from manganese flake industry. Besides, Chinese copper cathode producers expanded production and recorded increasing production capacity of crude selenium, leading to sufficient supply. Against this background, selenium dioxide prices received little support to go up.
- Asian Metal: The selenium market is sluggish now and a large number of suppliers suffer losses. What measures do you take to go through the hard time, avoid risks and optimize operation?
- Mr. Kang: Firstly, it's essential for us to keep improving the quality of selenium dioxide and maintain the relationship with downstream customers. In addition, current selenium dioxide prices continue to go down and show no sign of rebounding, so we hold inventory as low as possible to avoid risks caused by dropping prices. Meanwhile, we will moderately arrange presale of the material after forecasting the future price trend of raw material and purchasing attitude of downstream customers.
- Asian Metal:?Both the selenium powder and selenium dioxide markets remain dim at present. Could you share your opinions about selenium price trend in Q4 with us?
- Mr. Kang: For most market players, the selenium dioxide market is extremely sluggish now as both selenium market and related upstream and downstream industries are facing poor overall economic environment and imbalanced supply and demand relationship, so many peers are unconfident about market outlook. We are also pessimistic about the price trend of selenium dioxide in Q4, but we will continue to implement our market strategies, taking a positive attitude and waiting for the bottom line of price.
- Asian Metal: What are the stimulators of future selenium dioxide market trend in the long run?
- Mr. Kang: In my view, there are four possible stimulators. Firstly, selenium prices in overseas market stand high continuously and Tianyuan Manganese's selenium dioxide consumption volume takes up about 45% of the industry's total. With decreasing stocks, I wonder whether Tianyuan Manganese would begin to make purchase in the coming six to twelve months. Then it comes to the crude selenium output, stocks and sales attitude of upstream copper cathode producers. Thirdly, prices for selenium dioxide would also be impacted by the operating rate of Chinese manganese flake producers and price trend in Chinese market. The last point is that selenium products are mainly used in manganese flake industry while the application is limited in other fields, so the selenium industry may turn better if the demand from sodium selenite, selenium-rich agricultural products and other areas increases.
- Asian Metal:?Finally, do you have any suggestions to peers?
- Mr. Kang: As an experienced selenium dioxide market player, we saw the high level of RMB900,000/t (USD126,834/t) in 2011 and low level of RMB55,000/t (USD7,751/t) in 2016. It's normal to witness price ups and downs. As long as we take a calm attitude and adjust market strategies to cope with changes, the market will surely turn better. Spring usually comes right after the winter.
- Asian Metal: Thanks again for accepting our interview. Best wishes for you and wish your company a booming business!
- Mr. Kang: Thank you. Wish Asian Metal a brighter future!
