Demand for zinc oxide to stay weak
----Interview with Zhimeng Gao
President
Zhiyi Zinc Industry Group
- Zhiyi Zinc Industry is a professional, large-scale technical zinc oxide production enterprise. After years of innovation and development, currently the company has three R&D institutions and five production bases around the world (Shijiazhuang, Changzhou, Shanxi, Thailand, Europe) covering a total area of 198 acres, has fixed assets of 680 million yuan and 1,200 employees, ranking among the best in the world. The company actively develops the middle and high-end markets in the domestic and overseas, shapes the international brand image, and occupies the first opportunity in the domestic and international markets.
- Asian Metal: Mr. Gao, thank you for this interview. Firstly, could you pls give us a brief introduction of your company's main business?
- Mr. Gao: Zhiyi Zinc Industry is a professional, large-scale technical zinc oxide production enterprise, after years of innovation and development, the company now has 3 R & D institutions in the world and five production bases (Shijiazhuang Zhiyi Zinc Industry Co., LTD., Changzhou Zhiyi Zinc Industry Co., LTD., Thailand Zhiyi Zinc Industry Co., LTD., Shanxi Zhiyi Zinc Industry Co., LTD., Europe Zhiyi Zinc Industry Co., LTD.), covers a total area of 198 acres, with fixed assets of 680 million yuan and 1,200 employees under construction. Shijiazhuang has an annual production capacity of 80,000 tons, Changzhou 60,000 tons, Shanxi 20,000 tons, Thailand 60,000 tons, and Europe 100,000 tons. We would start production of zinc oxide in Vietnam in June this year.
- Asian Metal: What is the difference of raw materials between direct and indirect zinc oxide? What is the proportion of direct and indirect zinc oxide production in the domestic and overseas?
- Mr. Gao: Presently, in addition to zinc ingots, the raw materials of the indirect method will also be some zinc blocks and other zinc waste, which contains Zn 95%min, because of the shortage of supply, the price of zinc waste is in high level. The raw material of direct method is zinc waste such as zinc ash. Domestic direct method zinc oxide accounted for about 20%, indirect method zinc oxide accounted for nearly 80%. Direct method is prohibited in Southeast Asia because of pollution, and direct method is only available in a small number of areas such as Africa. Our zinc oxide is produced by indirect method. Direct method due to heavy metal pollution and environmental pollution will eventually be stopped.
- Asian Metal: What is the TCs for indirect zinc oxide in 2023 and how will it change in 2024?
- Mr. Gao: In 2023, the TCs for indirect zinc oxide is about RMB1,700-1,800 /t (USD235-249/t), which has remained stable so far in 2024. But with the rise of prices, the TCs would also show an upward trend, and is expected to rise to about RMB2,000/t (USD276/t) in 2024.
- Asian Metal: What was the demand for zinc oxide in 2023? How do you see the demand for zinc oxide changing in 2024?
- Mr. Gao: In the context of economic downturn of 2023, the demand for zinc oxide was weak, and it is expected that the demand for zinc oxide in 2024 will not change much from 2023, which is still weak. In 2023, the application ratio of zinc oxide in the rubber industry accounted for 50-60%, and other application fields were distributed in electromagnetic, soft magnetic, ceramics, chemical and other industries, and the proportion of application fields changed little in 2024.
- Asian Metal: As the price of zinc oxide goes up following those of raw materials, what is the impact on downstream demand? What about your idea of the price trend of zinc ingot in 2024?
- Mr. Gao: Overall, the rising price of zinc oxide has little impact on downstream demand, but many end customers prefer to purchase low prices of zinc oxide with higher cost performance. In the second half of 2024, the price of zinc ingots would still show an upward trend, and would rise to about RMB27,000-28,000/t (USD3,729-3,864/t).
- Asian Metal: What level does your company's current operating rate of zinc oxide stand at? How do you think about the pressure zinc oxide enterprises would face amid such overcapacity?
- Mr. Gao: Our current operating rate of zinc oxide is more than 90%, but due to weak demand, the operating rate of small enterprises is not high. Currently, under the overcapacity of zinc oxide and fierce price pressure between enterprises, the core competitiveness of enterprises focused on technology and financial capacity.
- Asian Metal: What are the challenges facing Chinese zinc oxide enterprises? How do you plan to deal with them?
- Mr. Gao: The challenge is the severe environment of economic depression, EU sanctions and weak demand. In this severe environment, whether zinc oxide enterprises can survive is to fight capital, market size, and the ability to reduce costs and increase efficiency. We would continue to expand our market share in 2024, with Vietnam starting production of 50,000 tons of annual production capacity in June 2024 and Shijiazhuang starting production of 100,000 tons of zinc oxide capacity by the end of this year. Our company strives to achieve 300,000 tons of zinc oxide production and sales by 2030, achieve sales revenue of more than 8 billion products, enter the forefront of the world, and build a technology-oriented zinc oxide manufacturing enterprise with the world's advanced technology level, the world's advanced management level and the world's advanced brand influence.
- Asian Metal: Thank you Mr. Gao, I wish your company a thriving business.
- Mr. Gao: Thank you.
