Asian Metal: Thank you for joining our interview, Mr. Yang, and please introduce your company briefly.

Mr. Yang: Hainan Wensheng Zr&Ti Industry Co., Ltd was established in 2003, and we currently mainly supply zircon sand, titanium concentrate, rutile, monazite, kyanite, garnet. Our zircon sand annual production capacity reaches 500,000t, and our current monthly output of zircon sand reached around 4,500t.

Asian Metal: In 2021, Chinese market saw two price-increase waves. The first one occurred in July and the other in December. What's the main reason to push the price up?

Mr. Yang: The market witnessed two big waves of price increase both because of the supply cut of zircon sand from international suppliers. In late June, RBM (South African Richards Bay Minerals) suspended production due to the escalated security concern, and the supply from South Africa sharply decreased then, resulting in the fact that the prices of zircon sand in China aggressively climbed in July to the peak of RMB18,500/t (USD2,931/t) in August. In late November, Australian Iluka and Tronox claimed that they would decrease supply to China in 2022, and the price went up again in December. Many clients who procure from international suppliers directly turned to secure supply from domestic suppliers. The zircon sand replenishment before the Chinese Spring Festival became active, and prices of zircon sand increased upon the tight spot supply in January.

Asian Metal: The supply before the Spring Festival tightened upon the active replenishment, therefore, some suppliers increased prices further after the holiday. How about the attitudes from the downtream after the holiday towards the continuously increased prices?

Mr. Yang: The spot market keep seeing short spot supply after the holiday, and clients became panic about the shortage and actively sent inquires. One part of clients desperately tried to replenish stocks before the holiday but failed, so they have to pay more after the holiday. The other part of clients held bullish attitudes to the price trend in Q2 and required to add more amounts after the holiday even though they made replenishments before the holiday. Major suppliers barely have spot supply, and only some small and medium sized suppliers have some spot of 10-20 containers. Clients actively purchased upon the upward price trend. For us, we mainly focus on delivering the signed contracts and accepted few new orders after holiday. We rejected many new orders as we prioritize to deliver contracts to long-term cooperating clients than new clients. Last week (March 6th) three or four clients asked me to sign contracts for April, but I didn't reply them yet.

Asian Metal: On the one hand, the zircon sand price consistently moved up; on the other hand, the major zirconium silicate plants blamed that they hardly could sell zirconium silicate upon the increased price of the raw material and lower operation rate of ceramic plants. The increased prices of zircon sand lead zirconium silicate plants to lose money. How do you see the price trend in April?

Mr. Yang: The current prices of zircon sand 65%min already broke through RMB20,000/t (USD3,169/t) EXW D/P，and we hope the prices would maintain at this level in April. The further price increase would stretch us with heavy pressure. As a processor, the increased prices of zircon sand bring us higher purchase risk of feedstocks. Once we booked intermedium zircon ore from international suppliers at high prices, it takes around two months to arrive in China and one month to process into commerial zircon sand, and we would face high risk of loss if the prices of zircon sand in China decrease or plunge after three months. The similar situation used to ccurr in 2012, prices of zircon sand hit RMB20,000/t (USD3,169/t) at that time and then dropped by RMB2,000-3,000/t (USD316-475/t) every week, but the raw material booked at high price didn't arrive in China yet. The current supply still keeps tight, we can see from the customs data that the zircon sand import volume decreased YOY in Q1. We also can feel that tight spot supply as clients urge delivery. We usually deliver three or four time every week for clients with monthly purchase amount of 1,000t, but now they ask to delivery 80% of the whole amount in the first half of this month. Overall, the prices in April would edge up but will not as aggressively as March because the downstream clients would not accept continuously increasing prices.

Asian Metal: Regarding the feedstock, how about the current supply ofintermedium ore and tailing ore? Will it influence your zircon sand output infurfure?

Mr. Yang: We import intermedium and tailing zircon ore from major international suppliers. Previously, we signed annual or half a year or quarter long contracts with them, but now we have to negotiate the price order by order. The current supply of feedstock keeps tight, and the prices keep going up continuously along with the increased prices of zircon sand in China. We can hardly bargain with them even for USD1-2/mtu as they could easily and immediately find a second buyer if we don't agree with their prices. While major suppliers still give priority to us as we're the first buyer in China for some of their products. Our feedstock supply would decrease by around 10% in 2022 against 2021, and the zircon sand output this year would also decrease.

Asian Metal: Considering the supply from RBM, how do you see the general price trend of zircon sand in China in 2022?

Mr. Yang: The price trend would not change during the whole year. RBM supplied small amount of around 3,000t of chemical zircon sand in February to China. Even though its supply would increase in the second half this year, the whole supply in 2022 remains lower than 2021. So the prices may slip in the second half of this year but would not turn over aggressively and still hold at high level against the same period last year.

Asian Metal: What's the new plan in your company in 2022? Do you have plan to extend business to upstream or downstream?

Mr. Yang: Currently, we don't have plan to extend our business to zircon ore mining or downstream business. We will focus on the sustainable supply of raw material and we will continue working with our major suppliers but will also seek some chances to cooperate with new suppliers.

Asian Metal: Thank you for joining the interview.

Mr. Yang: Thank you.