Wang Qingguo: Ferrotitanium market rises with fluctuations

----Interview with Wang Qingguo, general manager of Jinzhou Dahua Industry

Asian Metal: First, thanks a lot for your acception of interview and your support to Asian Metal. Could you please show your opinions on the current macroeconomic condition as a whole?
Mr Wang:Thank you! The global economy was recovering in 2010 and China did not be affected so deeply as other countries.The economy recovered and developed gradually in both developed countries such as Europe and America and in developiong countries in Asia and Africa, which gave greatly benefit influence on the whole metal market.However, Chinese government was rectifying and restricting the real estate market from early 2010 to now, which was the main consumer of steel products,therefore, the ferroalloy market was also affected to some degree.
Meanwhile, the policies of energy saving and emission reduction and high resource-consuming rectification greatly affected the ferroalloy market. The productive technology of ferroalloy is not complicated while it is the real high resource-consuming industry. Although most regions has cancelled the policy of energy saving and emission reduction, the effect is great to the ferroalloy production. At present, the ferroalloy market is strong and the price is rising up.
AM: How about the current ferroalloy market under such macroeconomy policy?
Mr Wang:Though the policy of restricting the development of real estate greatly affected the steel mills, in addition with the policy of energy saving and emission reduction which caused the decrease of steel production, in fact, the ferroalloy market was not influenced largely.
Ferrotitanium is a small type of ferroalloy and can only be used on special steel production, therefore, only if the production of special steel is not affected, the ferrotitanium market will not be weak. However, it does not mean that the ferrotitanium market is better than other ferroalloy market, which is really low in fact. Downstream demand for special steel, which is used in miliraty and other restrictive industries is much fewer than that of common steel. At the same time, ferroalloy is used less and less in special steel production with the development of new resources.
Ferroalloy is mainly exported in China while for ferrotitanium, export is almost auxiliary. Firstly, demand for ferroalloy is different in home and abroad and domestic demand is mainly low FeTi 30% 40%min while that of in international market is FeTi70%min. Secondly, in order to protect the resources, Chinese government imposes high export tariff and thus, most traders have to pay for the keeping of the business instead of making a profit. Under such circumstance, they prefer to selling the ferrotitanium to domestic downstream mills.
AM: The present market is low and most mills have stop production. Could you give some advice to the ferrotitanium producers under such hostile environment?
Mr Wang: The curretn market is indeed quiet and the market share is small. However, it does not mean that there is no improvement of ferrotitanium market.
Firstly, domestic consumers still consider the ferrotitanium as the raw material and the larte-sized mills, as well as the small and medium sized private mills remain purchasing certain amounts of ferrotitanium to keep the normal operation,therefore, there must be ferrotitanium producers in the market. Most traders stop the ferrotitanium production because they return to other ferroalloy with more profits. Mills who specialized in ferrotitanium production can maintain their companies.
Secondly, traders have to control the costs. There are more limitations on half-flow produciton than full production. Our company can produce the ferrotitanium and its raw material,namely,aluminum powder at the same time even though we did not produce in full-flow production,in which way we can avoid the influence of raw material suppliers and sell the aluminum powder at the same time.
Thirdly, we can accept both big and small orders in accordance with the comsumer’s demands provided that the payment methods can be accepted. At present, domestic ferrotitanium demand is mainly low-grade with small demand for high-grade and middle-grade, therefore, we put most production on low-grade ferrotitanium and do not plan to produce middle-grate material if there are no proper orders.
Finally, traders have to look for clients and expand the market in multiaspect. Not only the steel mills use ferrotitanium, but the cast industry and core-spun yarn production apply the material. What’s more, demand for ferrotitanium is increasing and thus, our company mainly produce finish rolling ferrotitanium powder with slight lower price than that of ferrotitanium. We can make the material to powder after rolling with low costs and develop the market in multiaspect.
AM: What’s your expectation for the ferrotitanium market in this year?
Mr Wang: Ferrotitanium market keeps oversupply in recent year, so expectations for ferrotitanium is not high among traders. Some large-sized steel mills purchase few amounts of ferrotitanium at 10-20t. There is no big change on special steel market and demand from steel mills remains the same as that of last year while the actual situation depends on the delivery before May because the July and August are off-season of ferrotitanium purchase.
AM: Almost all metal prices inreased greatly in domestic market after the Spring Festival as well as the ferrotitanium price, which follows the upward trend of raw material. What’s your opinion on this situation?
Mr Wang: Metal industry experienced great price growth after the holiday. Taking ferrotitanium as an example,its raw material includes titanium concentrate, iron ore fines,ganister sand,aluminum powder,magnesite and coal and all the material prices climb up. The large scale of raw material price growth leads to the increase of downstream products price.
AM: Do you have any good suggestion on the current ferrotitanium market?
Mr Wang:Most trader are lack of confidence about the ferrotitanium industry and I do not agree on this point. We are experiencing market economy at present and there must be a reason of the existence of every industry, so does the ferrotitanium. A benefit direction of ferrotitanium development is to specialized in and be carefull to this industry insteading of buying or selling the material in general. For example, we have to divide the same grade ferrotitanium into different types, such as that the content of some trace elements should be distinguished and the exact content of elementary should be stable. In this way, we can enhance the trust among consumers with a little technology and at the same time, we can raise the ferroritanium price, achieving many things at one stroke.
AM: But can the market still remain stable if all products prices are raised greatly?
Mr Wang:The main reason for price growth is the increase demand for various metals in China, which is a main production base of raw material and the rapid development of economy in Europe and America with the recovery in 2010. With the strong support of demand, the price is expected to move higher in future market.
Although the government is rectifying the real estate market and decreasing the housing price, the price accumulated in long term will not decrease as people’s expectation, therefore, the real estate market will remain stable finally and demand for ferroalloy will also be stable.
AM: Thank you once again for your support to Asian Metal!
Mr Wang: Thank you!