Optimizing ferromanganese technique to sharpen competitive edge

Asian Metal: Thank you very much for accepting this interview from Asian Metal. First of all, would you please give us a detailed introduction of your business?

Mr. Zhang: We have a set of submerged arc furnace, three sets of refining furnaces and eight sets of medium-frequency electric furnaces, which are mainly used for production of high, medium and low carbon ferromanganese, manganese metal and related multielement alloys. We have a total of nine workshops, including three arc furnace smelting workshops (three refining furnaces of 5,000KVA), one metallurgy workshop (a set of submerged arc furnaces of 12,500KVA), special alloy smelting workshops (two), workshops of amorphous refractory materials, powder preparation, mechanical manufacturing and processing. At present, annual capacities can reach 30,000t (2,500tpm) for high carbon ferromanganese and 40,000tpy (about 3,300tpm) for medium and low carbon ferromanganese.

Asian Metal: How about your production of ferromanganese in the past year?

Mr. Zhang: We managed to ensure the completion rate of 99% for consumer orders (including delays for a few orders due to environmental rectification) in the past year. The environmental inspection is quite strict in Anyang. In response to the call of the government, we adjusted our production moderately, but overall production has not been greatly affected with successful order deliveries as all our equipment has passed the environmental inspection assessment.

Asian Metal: What advantages and disadvantages does your company have in ferromanganese production compared to ferromanganese plants in North China?

Mr. Zhang: Anyang is the largest alloy base in China with relatively active information feedback and lower transportation cost. Thus, Jinfang is relatively advantageous in this industry on its operation reputation for more than 20 years. However, we still need to catch up with the scale and output when compared with many emerging industrial parks in Northeastern China. We will enhance cooperation and communication with large-scale enterprises to make up for our shortcomings.

Asian Metal: High carbon ferromanganese prices in June fell by RMB400/t (USD62.47/t) from May, but the cost remains at high level. How about sales of your company this month?

Mr. Zhang: We are not in high pressure and generally speaking, production and sales are well currently. The price for high manganese is relatively transparent every month. We purchase manganese ore from both the spot market and the futures market so as to rationally control of the ferromanganese production cost and effectively control stocks. Meanwhile, based on relatively stable downstream consumers, we can maintain normal monthly sales, which will be affected by neither the price surge nor the slump.

Asian Metal: Does the environmental inspection in Anyang affect your production?

Mr. Zhang: Through rectification, our company has passed the acceptance check of the national environmental team and we are in normal production at present. Anyang is more stringent in environmental protection and quite a few of alloy factories have been shut down with hopelessness for any resumption in short term. However, our production hasn't been affected as our equipment has met the environmental assessment requirements after previous equipment rectification.

Asian Metal: UMK, BHP and other manganese ore giants have sharply lowered their quotations to China since May. Will this move affect the import volume of manganese ore for your company?

Mr. Zhang: At present, we have adopted the mode of import plus spot purchase at ports. The lowering offers from these industrial giants do affect us, but the impact is limited in production and sales. Manganese ore giants all lowered offers sharply from May to June, but our manganese ore cost remains at relatively high level as we purchased a lot of expensive ores previously. Therefore, we might reduce purchases through long-term contracts but increase spot purchases at ports in view of slipping manganese ore prices.

Asian Metal: What is the operating rate of ferromanganese plants in local market currently?

Mr. Zhang: The current operating rate is about 35%. At present, there are only a few alloy factories approved in the environmental inspection assessment at present, which is expected to be stable in the coming few months as many alloy plants are in low possibility for production resumption in short time coupled with low operating rate in local Anyang.

Asian Metal: What is the development direction of your company in the next 3-5 years?

Mr. Zhang: On the basis of the original production, we will increase the development of special manganese alloys and optimize the production process to meet the different needs of customers. Furthermore, it will be more profitable to control the production cost based on the original production and meanwhile upgrade existing production process and expand downstream consumer base.

Asian Metal: Thank you very much for this interview with Asian Metal.