Optimistic with black silicon carbide market demand in 2021

Asian Metal: Thanks for accepting this interview, Mr. Gu! Would you please introduce your company?

Mr. Gu: With a total investment of RMB220 million (USD33.67 million), Ningxia Hexing Carbon Based Materials Co., Ltd is a silicon carbide producer and mainly focuses on refractory and abrasive products. The company was founded and officially put into operation in May 2012 with two production lines of 32,500kVA and 35,000kVA with an annual production capacity of 70,000t of silicon carbide. Our clients are not only from domestic market, but also from America, Europe, Africa, Southeast Asia, Japan, South Korea and other overseas countries.

Asian Metal: Could you please introduce the trend of Chinese black silicon carbide market in 2020 and explain the main reasons for it?

Mr. Gu: In Q1, due to the beginning of COVID-19 breakout, foreign customers concentrated on stocking and both the demand and prices kept stable. In Q2, given the outbreak of COVID-19 in overseas market, Chinese black silicon market saw high stocks due to the stagnant export market. Therefore, the producers cut prices to promote sales and the prices dropped to levels lower than the production cost. The demand in domestic market resumed in Q3 and some producers cut production or suspended production to reduce stocks, resulting in the stable prices. In Q4, as the demand in domestic market recovered to the similar level of the same period last year with the increasing export market demand, the prices increased with the increased prices of raw materials.

Asian Metal: What about the operating rate and spot supply of black silicon industry currently?

Mr. Gu: Given the increased electricity charge in Gansu, most producers could not maintain the prices before Chinese New Year. However, the downstream customers are difficult to accept the increased prices in the short term, resulting in suspension of some producers. Therefore, the current operating rate in Gansu keeps less than 50%. Meanwhile, most producers in Ningxia maintain full capacity production. Beside, as most producers closed few orders during Chinese New Year, they hold a montly outout as inventory.

Asian Metal: How about the demand for black silicon carbide in domestic market and overseas market at present?

Mr. Gu: At present, the operating rate of domestic downstream consumers recovered to the level during the same period of last year, and the demand increased significantly YoY. However, as most downstream customers reserved enough inventory for one-month consumption before Chinese New Year, we expected that purchase peak season would come in March. The market in Japan and South Korea, America, Europe and other major overseas export market also recovered with the increasing export volume.

Asian Metal: Why did the prices of black silicon carbide keep rising in Q4 of 2020? How about in Q1 of 2021?

Mr. Gu: The prices of raw materials such as anthracite coal and petroleum coke kept increasing since earl this winter, as well as the resuming demand, most producers have limited inventories. In addition, the prices already fell to production cost in the first half of the year, so the producers raised the prices to ensure profits. In Q1 of 2021, due to the increased electricity charge in Gansu, the producers raised the prices but the downstream clients refused to buy at increased prices, resulting in steady prices at the moment. However, with reducing stocks, the prices would go up for sure.

Asian Metal: what do you think of the black silicon carbide market in 2021?

Mr. Gu: As Chinese silicon carbide market depends on the export market, the market in 2021 mainly depends on the control of COVID-19 abroad and the overseas demand. Given that most foreign consumers regard COVID-19 prevention and control as normal, the demand would get stronger than 2020, and the prices would gradually return to a rational level.

Asian Metal: What are your future plans and goals?

Mr. Gu: We will focus on the development of silicon carbide deep processing, silicon carbide composite materials and products in the future. We acquire 60 mu of field in the southeast of the plant for the project of an annual production capacity of 5,000t of sub-micron grade silicon carbide micro powder and 5,000t of silicon carbide finished products. The new project will increase the sales revenue by RMB400 million (USD61 million) and taxes by RMB80 million (USD12 million) with employment for 100 people.

Asian Metal: Could you please introduce the new project?

Mr. Gu: Firstly, we would focus on low-end manufacture silicon carbide abrasives (sandpaper, cutting pieces and grinding wheel pieces) and silicon carbide refractory bricks, and further develop special silicon carbide refractory products to extend the product chain with more added value, and change the situation of simple processing and selling of silicon carbide basic materials. Secondly, we would pay more attention to the forefront of the development of silicon carbide industry, the nanoscale silicon carbide powder materials, which can be widely used in high-performance structural ceramics (such as rocket nozzles, nuclear industry, etc.), wave absorbing materials, anti-wear lubricating grease, high-performance brake pads, modified high hardness wear-resistant powder coating, composite ceramic enhanced toughening, modified resin, structural coatings, functional coatings, protective coatings, absorbing materials, stealth materials, protective armor for tanks and armored vehicles. Finally, we would make fully use of nanoscale silicon carbide powder for the development of high-precision cutting-edge silicon carbide products, such as silicon carbide nanoscale battery anode material, silicon carbide foam ceramics, silicon carbide heat exchange tube, high-end silicon carbide ceramic seals, conductive ceramics and other products.

Asian Metal: Thank you for your excellent share. Wish your company a better future!

Mr. Gu: Thank you and also wish your company a brighter future!