Yu Tao: Optimistic on the gallium future market, solidarity needed to promote a healthier industry

Asian Metal: Good afternoon, Mr. Yu, thanks for having the interview with me. So, can you share some information about the current gallium market with us?

Yu: Ok. Prices of gallium metal 99.99%min once reached to RMB6,400/kg (USD1,041/kg) in 2011 when the market was prosperous, then kept downward tendency. Values are at around RMB1,650/kg (USD269/kg) for the time being, which just rebounded slightly in October of 2012 and March of 2013. We mainly supply materials to consumers of magnets industry. As I learnt, NdFeB orders have been shrinking, which impacts the gallium market. Overall, demand of gallium in the year decreases, compared with that of the past year.

Asian Metal: In your opinion, what are the factors that hinder the gallium price to go up?

Yu: From my point of view, the low price level has no much relationship with demand currently. The main reason is that market participants can’t unit as one to promote the market to develop healthily. There is no consensus between them. In order to account for market shares, many sellers prefer to move materials by cracking down prices, which leads to an unhealthy gallium market. Like germanium, an industry association should be built up to guide enterprises to shoulder their responsibilities.

Asian Metal: Some market participants lack confidence on the future market and express that the gallium market has no potential to go up in the coming months. What are about your opinions?

Yu: I am still optimistic on the gallium future market although oversupply has been reported in the market. Actually, many industries are facing the same situation. Gallium can be used in thermometer production. The thermometer containing mercury is popular in our daily life currently. But, you know, mercury is a poisonous material and brings pollutions to the environment. I heard that there are about three companies trying to use alloy which includes gallium or other metals to replace mercury in the thermometer. However, due to the higher production cost, the new thermometer without mercury still needs a period of time to be well known by us. I believe that demand of gallium will be in explosive increase once the related government departments encourage and give supports to the industry as well as the promising LED industry.

Asian Metal: Since you have confidence on the future market. Do you think prices of gallium are likely to rebound in the second half of the year?

Yu: I think the prices will do. Influenced by investment demand from the exchanges, the current rates of indium and germanium have little relationship with the supply and demand in the spot market. Many enterprises and individuals become more interested in the materials which have large room of appreciation and bring revenues to them. Those investors begin to pay attention to gallium as prices of it keep in a low level at the moment. In my opinion, if price of gallium metal 99.99%min can reach to be above RMB1,800/kg (USD293/kg), there are no difficulties for it getting to RMB2,000/kg (USD326/kg). But if it fails, the gallium market will see RMB1,700-1,750/kg (USD277-285/kg) in the most time of Q3 and Q4. Moreover, many alumina plants suffer from excess capacity and values for alumina are in low level as well. If the government implements related policies to the industry, those alumina plants will reduce their output, so will the gallium plants. Thus, gallium prices have impetus to go up.

Asian Metal: Gallium began to be dealt in the THE FANYA at the beginning of March and attracted some investors. How do you think of the exchange?

Yu: As we know, indium and germanium have been operated in the THE FANYA for a long period of time and many people are interested in them. Although there is only a few gallium metal suppliers cooperating with THE FANYA currently, we can’t have judgments that other suppliers have no interests in the platform by the phenomenon. As far as I’m concerned, like indium, gallium metal will attract more and more attention as time goes by. We can’t ignore the rising platform.

Asian Metal: As I learnt, your company has built up a new high-purity gallium plant, so, what’s about the operation condition of the plant now?

Yu: Our plant is in pilot run at the moment. If the high-purity gallium is qualified a month later, the plant will be in mass production. The production capacity is at around 40tpy and we will produce according to the market.

Asian Metal: Thank you so much for sharing the market information with us. Hope that your new plant will be in mass production successfully in the near future.

Yu: Thanks for your blessings. I also wish that we can keep in good communication with each other about the market information in the coming days.