Zhuzhong Tan: Saving energy, reducing man power, lowering consumption and protecting environment are the keys to success for Chinese manganese producers

Asian Metal: Good day, Mr. Tan. Thank you for granting this interview. Could you please make an introduction of Chinese manganese production in H1 of 2013?

Tan: Outputs of Chinese manganese flake have kept stable so far in 2013 year on year. The operation rate increased obviously after the Chinese New Year, and March and April appeared to be the peak season of Chinese manganese flake production in H1 of this year, with a monthly output of 110,000-120,000tpm. The total output of H1 is believed to be around 600,000t.

Asian Metal: The operation rate has increased again as of late August after decreasing in June and July, do you think the output of H2 will exceed that of H1, and how about the price trend?

Tan: The operating rate moves up to about 40% now, driven by resumption among medium and small sized producers, and it is predicted that output of September will witness an increase of 5,000t compared with that of August. However, outputs will decrease in Q4 as most production areas will conduct power price for dry season from October on. In my opinion, the total output of H2 will be 400,000-500,000t, and the ex-works prices of Chinese manganese flake should be at the range of RMB11,500-12,500/t (USD1879-2,043/t).

Asian Metal: Will demand for manganese metals from downstream markets truly rebound in H2 of this year?

Tan: As we know, the 200 series of stainless steel dominate downstream markets of manganese metals. I do not think demand from Chinese end users can make substantial improvements in H2 as the government has strengthened the regulation of the real estate industry and business conditions remain unsatisfactory at the moment. Besides, people prefer lean layout to luxury decoration when building houses nowadays, which also suppresses demand for stainless steel and manganese metals.

Asian Metal: How do you evaluate export market performance of Chinese manganese metals so far this year?

Tan: Reduction of Chinese manganese briquette exports appears to be the most prominent feature after cancelation of Chinese unwrought manganese export duty. Because manganese briquette has lost price advantages over manganese flake, whose production costs are normally about RMB500/t (USD82/t) lower than those of the former. And as a result, most overseas end users reduce purchasing quantity of manganese briquette and become more active in buying manganese flake or manganese lump. However, the total demand for Chinese manganese metals from overseas markets is expected to keep relatively steady over that of last year, and the trading volume of 2013 should be 250,000-300,000t.

But it is worth noting that some medium and small sized producers export the materials at lower prices without value added tax invoices, which caused troubles for traditional exporters to do the business in normal ways. And we are working on this problem and will summit the solution to related departments as soon as possible.

Asian Metal: Do you have any suggestions for Chinese manganese producers who aim to win the future competition?

Tan: I believe that saving energy, reducing man power, lowering consumption and protecting environment are the keys to success for Chinese manganese producers.

To save energy and lower consumption are specific measures of producing environmentally, which can also reduce the production costs essentially. Large manganese flake producers can reduce power consumption from 6,300-6,800KWH/t to 5,000-6,000KWH/t through technological innovation in the coming years. Meanwhile, increasing use ratio of manganese mines and reducing man power are also efficient methods to lower costs and protect the environment.

By all above measures, the environmental standards of Chinese manganese production can make substantial improvements, along with costs of manganese flake reducing from RMB12,500-13,000/t (USD2,043-2,124/t) to about RMB11,500/t (USD1,879/t).

Asian Metal: We appreciate your support giving us your valuable time and we wish you good health and happy life!