Demand for zinc ingot to weaken in Q4
----Interview with Yongqiang Li
General Manager
Sichuan Huipeng Zinc Industry Co., Ltd.
- Set up in 2007, Sichuan Huipeng Zinc Industry Co., Ltd. is a privately owned company focusing upon recycling and comprehensive utilization of nonferrous metals, producing zinc ingot and lead ingot with zinc-contained slag from nonferrous metal smelting process. It has an annual production capacity of 50,000t of zinc ingot and 10,000t of lead ingot.
- Asian Metal: Mr. Li, thank you for taking our interview. Would you please give a brief introduction on your company at first?
- Mr. Li: Our company has a 13-year history starting in 2007. As a privately owned company, we focus upon recycling and comprehensive utilization of nonferrous metals, producing zinc ingot and lead ingot with zinc slag and secondary zinc oxide recycled from nonferrous metal smelting residues. It has an annual production capacity of 50,000t of zinc ingot and 10,000t of lead ingot.
- Asian Metal: How are your production and sales going on now?
- Mr. Li: Our company runs at full capacity now with a monthly zinc ingot output of around 4,000t, and our clients are mainly from downstream zinc galvanizing industry. Thanks to steady demand at present, we are able to sell out our products once they come off lines, with no stocks left.
- Asian Metal: How is downstream demand now? What are the impacts on market demand from the COVID-19 pandemic this year?
- Mr. Li: September and October are the traditional consumption peak season for zinc ingot industry, which has not come to an end yet now, so current market demand for zinc ingot still grows to some extent compared with previous months. But the COVID-19 pandemic has imposed great impacts upon overall zinc ingot consumption. The export market is the first inflicted. With the overseas pandemic situation deteriorating continuously, exports of end products such as zinc galvanizing products, zinc alloy and zinc oxide decreased notably on a year-to-year basis. Regarding the domestic market, operation rates of automobile, real estates and infrastructure industries have more or less been affected by the COVID-19 pandemic. The two factors both led to shrinking market demand for zinc ingot.
- Asian Metal: Would you please say something about current raw material supply?
- Mr. Li: At present we mainly use secondary zinc oxide as raw material. Compared with in March to May when raw material supply was tight as a result of the COVID-19 pandemic, raw material supply now has improved notably since secondary zinc oxide imported from Indonesia, Malaysia and Myanmar can enter into the Chinese domestic market via land transportation. In sum, raw material supply is sufficient now.
- Asian Metal: In recent years, the nonferrous metal smelting industry in China has been under relatively great impacts from environmental inspections. What are your inputs into environmental protection facilities? And what effects have environmental inspections imposed upon your company?
- Mr. Li: Environmental inspections have been strict in recent years, but our company strictly abides by relevant regulations and requirements. We carried out technical upgrading on our environmental production equipment; meanwhile, we adopt on-line monitoring on our gas and dust emission and the emission information is accessible to local environmental authorities. Now environmental inspections in China have been regularized and governments no longer adopt previous practices, for example, indiscriminately forcing involved enterprises to stop production. Our experience is that once you have met with requirements on environmental performance, environmental inspections won't have great impacts on your production.
- Asian Metal: What are your expectations on zinc ingot consumption in Q4 2020?
- Mr. Li: Generally speaking, I am not optimistic about zinc ingot consumption in Q4. On one hand, it's possible that the COVID-19 will outbreak again globally this quarter, and on the other hand, with the U.S. presidential election approaching, the conflicts between the U.S. and China are possible to escalate. The two factors will both contribute to weakening demand and shrinking exports. But as zinc smelting plants in China maintain high operating rates, the zinc ingot market might see oversupply.
- Asian Metal: How do you predict the price trend for zinc ingot in Q4 2020?
- Mr. Li: I believe that in Q4 zinc ingot prices would show a downward trend. As mentioned above, zinc ingot consumption is expected to decrease in Q4, while at the macro-level, the recurring possibility for COVID-19 and the uncertainties in the U.S.-China conflicts are also expected to drive zinc prices down.
- Asian Metal: What are your company's future development plan and goals?
- Mr. Li: Our goals now are to insist on our product quality, strengthen internal management and cut production costs so as to achieve long-term sound operation of the company.
- Asian Metal: Thanks for taking our interview. Wish your company better and better.
- Mr. Li: Thanks.
