Thin Profits & Delayed Payments, Chinese Rare Earth Metal Industry Development Discussion

Asian Metal: Hello, Mr. Mi! Thank you for accepting this interview of Asian Metal. Could you please introduce your company and your main business briefly?

Mr. Mi: Established in November 2008, Baotou Shengyou Rare Earth Co., Ltd. (Shengyou Rare Earth) originated from Baotou Kemao New Technology Development & Application Institute in 1993 and Baotou Keju Rare Earth Co., Ltd. in 2002. The company's research center was built by Cheng Yongshun, Ma Suju and a group of experienced experts. Our company has leading developed PrNd mischmetal, PrNdDy alloy and NdDy alloy and provided these materials for NdFeB magnet industry, which reduced production costs for downstream companies. Currently, with an annual production capacity of 1,000t, Shengyou Rare Earth mainly engages in production and sales of rare earth alloys.

Asian Metal: Thank you for your introduction. Would you please give us a brief introduction of your career?

Mr. Mi: I joined Shengyou Rare Earth in 2008 and has been making every progress and witnessing the growth of the company.

Asian Metal: As we know, Shengyou Rare Earth is a time-hornored rare earth metal company with more than 20 years of industry experience and is also the first company which produced PrNd mischmetal and PrNdDy alloys in the industry. Can you introduce us the capacity, supply and demand status quo of China's rare earth metal industry?

Mr. Mi: The rare earth metal industry locates in the downstream of rare earth separation industry and the upstream for NdFeB magnet industry. The industry develops from several electrolytic furnaces to the production scale of more than 50,000tpy. The industry develops rapidly and sees oversupply now.

Asian Metal: Looking back to 2018, Chinese PrNd mischmetal price showed downtrend after the Spring Festival holiday. Seen from the price trend of Asian Metal below, the Chinese PrNd mischmetal price reached two peaks in early March and mid-June in H1 2018, what do you think? But the price was relatively stable in H2 2018, what's your opinion? Can you share with us your prediction about the price trend in 2019?

Mr. Mi: Chinese PrNd mischmetal prices moved up in March and June as the downstream demand increased. In addition, supplier raising offers was another key factor for the price rise. In H2 of 2018, smelters adjusted production according to orders and arranged production cautiously, so the supply and demand kept in a balance, and thus the price showed flat trend. About the price trend in 2019, I believe the price would stay relatively stable, along with small fluctuations.

Asian Metal: Since Q3 2018, most major smelters have reported their new orders were insufficient. Discouraged by the fierce competition among suppliers, the profits became thinner, and consumers delayed payment at the same time. What's the root cause for this phenomenon? What's the ideal model in your mind?

Mr. Mi: For lack of NdFeB magnet orders, Chinese smelters reduced outputs and produced with lower operation rates after Q3, 2018. As a consequence, smelters had to lower prices in order to obtain new orders. I think the root cause for this phenomenon was overcapacity. The ideal image in my mind is the balance on production and sales.

Asian Metal: As far as I am concerned, several companies are investing in and establishing new smelting plants in Jiuyuan Industry Park of Baotou, do you think these new metal projects would promote new technologies and innovations? What are advantages for those new smelters? Will approximately 30,000tpy of new capacity bring more fierce competition in the rare earth metal industry? How do smelters release the pressure in the coming year?

Mr. Mi: I suppose it would be hard for these smelters to promote new technologies and innovations as those new smelters are only repeating construction of low-end production lines, and their advantages are electricity prices and the climate in Baotou. These new built rare earth metal projects have no much achievement of new technologies. Where there is a market, there is the competition, it is an evitable trend. Currently, the market has been oversupplied, and the new projects would only intensify the disorderly competition. In this case, the only way that smelters release this pressure is to reduce capacity and make efforts to develop new technologies.

Asian Metal: I learnt that other smelters also entrust your company to produce rare earth metal products, what's the ratio in your products? Why do you accept this business and what's the main advantage for this model?

Mr. Mi: It is about 50% within the whole products. As our orders are insufficient, we accept other companies' business as well in order to avoid the risk of management. In this way, we would develop more steadily.

Asian Metal: How about your production state in 2018? Do you have some new plans and visions for 2019?

Mr. Mi: We operate relatively stable in 2018. About the plan for 2019, we would concentrate closely on market trend, increase the market demand and keep up with the industry policies, so that our plant would develop into a new level.

Asian Metal: At last, can Mr. Mi share us your feelings about the management and administration? Would you share us the spirit of "Insisting value creation and pursuing high-quality products" for your company?

Mr Mi: After about 25 years of hard working, we have built firm cooperation with several major magnet plants and earned the good reputation in our industry. My products have been free from many users' inspections. I owe all these results to the spirit, so that we regulate management, ensure high-quality products and pursue an excellent development.

Asian Metal: Asian Metal is the authoritative platform for market information, and also provides the reference prices for rare earth industry. Can Mr. Mi give us some suggestions about our service? Thank you!

Mr. Mi: Asian Metal is the leading company that provides the metal market information all over the world. Now your company offers comprehensive, accurate and timely international market prices and news. You have been widely recognized by the market and have acquired a far-reaching international influence. I wish Asian Metal would insist to offer the timely, accurate information. With your all-dimensional and multi-angle guidance, we can realize the market in depth and then make the right decision!

Asian Metal: Thanks, Mr. Mi! Asian Metal will carry your vision to provide the objective, professional and authoritative market information for the industry. Thanks again for your support and sharing! Wish you every success in your business!

Mr. Mi: Thank you!