Zeng Guozhong: Tantalum niobium market witnesses slow demand but positive outlook

Asian Metal: Mr. Zeng, thank you very much to accept our interview. Could you please introduce current situation of your company briefly?

Zeng: On the whole, our company is not large and will influence the industry limitedly. However, the company has made great progress in production and operation, internal management as well as business development, and it can also seize the opportunity of current market to receive recognition from domestic colleagues with numerous relative works according to ourselves’ characteristics.

Asian Metal: What do you think about current tantalum niobium market?

Zeng: Demand for ordinary grade tantalum oxide and niobium oxide remains weak despite high prices of international tantalum concentrate and niobium concentrate, while buyers still depress purchase prices, and we are operating under pressures.

Actually, prices of niobium concentrate fell back slightly after the Spring Festival, while price reductions were less than those of niobium oxide prices, thus domestic market saw price inversion. I think price varied due to two reasons. One is structural adjustment of application fields and increasing supply and the other is product structure being influenced by domestic and overseas economy.

In the whole niobium market since 2010, application fields of niobium products continue to expand, especially niobium metal (including alloy) and high purity niobium oxide, and prices of niobium raw materials as well as products continued to increase. As for now, demand for niobium metal remains strong, while demand for optical grade and monocrystal grade niobium oxide shrinks because of upgrading of products and techniques.

Our company focuses on improving products quality, tapping internal potential, reducing production costs and enhancing product competition, which is similar to adjustment process of tantalum niobium market. Moreover, we should be more confident about the market and pay close attention to scientific progress and development of related industries, and it is also important to keep pace with scientific development technologically as well as produce products with better quality and meet the needs of the market.

Asian Metal: Since demand for common tantalum oxide remains dim, major domestic consumers of high purity niobium oxide also have no plans of purchasing, why does the price of concentration niobium ore still remain firm? Besides CBMM’s control, are there any other reasons that have influences on prices of concentration niobium ore?

Zeng: Price of concentration niobium ore is not as firm as expected; on the contrary, it also slides down slightly. The main reason is that CBMM affected the market of niobium oxide greatly. Its advantages of resources and production conditions enable it to dominate the market.

Despite that fact that the application of niobium oxide is under adjustment, we are still optimistic about future demand for niobium oxide. Therefore, we do not suspend purchasing raw materials. Although sales volume remains at low levels at present, buyers restore the materials by their own needs. Hence, prices of niobium will have little room for decreasing.

Asian Metal: what do you think are the reasons for the prolonged soft demand while firm prices for tantalum ore at present?

Zeng: In my opinion, the tantalum market is similar with the niobium products market. There is still large space for tantalum market to develop as demand did not slump. Current low ebb for tantalum market is attributed to the economic environment and limitation from the EICC.

With many uncertainties on the development of European economy, buyers of TaNb products are not buying in large Asian Metalount like they did previously, and they would prefer arranging production and raw material procurement according to the need of orders. Demand is lower apparently yet unchanged actually. Buyers also have putting forward higher requirements to suppliers according to the rules to TaNb industry set by the EICC, while China occupying large portion on international TaNb market, so purchasers will ask for higher standard on Chinese market.

The market in Japan is much the same as it is known that manufactures are stimulating capital flow and limiting time for capital turnover by reducing inventory and procurement in order to avoid negative impact caused by the devaluing Yen. Therefore, it comes with a stage decrease for demand, nevertheless, buyers will still need to buy raw materials if things are changed. But we need to have the mental preparation that they will still ask for higher requirements to the products.

Tantalum ore market is similar as traders increased delivery prices claiming to meet the demand of EICC, contributing to one of the main reasons for the retained firm tantalum ore price.

In addition, we are focusing on large companies with international influences which could bring backward pressure to Chinese TaNb market should they were looking forward to lower purchase price of products. We have heard that there are concluded orders for potassium fluotantalate at a high price on domestic market, dropping away from current tantalum price. Price of raw material keeps at around USD120/lb, having little room to rise for the time being. If price is higher than the mentioned level, potential deals would be impractical.

Asian Metal: We have known that your company produces series of tantalum products including electrical condenser tantalum powder, hypoxia tantalum powder, metallurgical tantalum powder, tantalum oxide, tantalum bars and potassium fluotantalate. Which was your featured tantalum product last year? How do you think your passing the EICC would affect your business?

Zeng: Outputs of tantalum products were low last year as we focused on the production of niobium products. Affected by many factors, major tantalum products primarily include metallurgical tantalum powder, tantalum oxide and some kind of electrical condenser tantalum powder.

Many large domestic companies went through with the inspection of EICC and most of them had got a good knowledge of the question. As far as I Asian Metal concerned, all organizations with whatever structures should meet the requirements which are beneficial to human development and social progress and own the general consent of internal members. It is a question related to social responsibility, so we have to deals with it positively instead of complaining. Fortunately, domestic manufactures come to get clearer idea about its importance.

It is beneficial for the company development and market occupying to passing the EICC. We have great confidence to future market of TaNb especially tantalum. Although the niobium market is flat now and direct sales volume of niobium oxide reduced in large Asian Metalount, demand for niobium oxide is still promising. As for tantalum, the EICC verification has brought us a better recognition to international market. We increased market portions for our products globally and did not suffer any constriction or limitation, which is a specific reflect for our persistent to good faith business philosophy. In another way, we attach great importance to national laws and influence of company behavior, which reflects the intrinsic quality of the company. By the way, performances of other companies are not denied here.

Asian Metal: It is known that domestic ferrocolumbium, which bares high production cost, has no advantages compared to imported Brazilian ferrocolumbium if calculated from the rate of return on investment. Please make a brief introduction on the production, consumption and market occupation of domestic ferrocolumbium.

Zeng: Our company, as one of the oldest domestic producers of ferrocolumbium, is in the list of the draft units in “National Standard of Ferrocolumbium”. Therefore, we own better production technology and higher recognition degree from clients. Nevertheless, we could not get the price advantages got by Brazilian ferrocolumbium, so we take our own advantage to produce more products with special grades to satisfy particular clients’ needs instead of go for general qualified ferrocolumbium. Meanwhile, in order to provide personalized service and achieve high-end and differential management, we have surely reduced the output.

Asian Metal: It is reported that several new members joined domestic TaNb industry in 2012 which include China Zhenhua (Group) Xinyun Electronic Comp.& Dev. Co., Ltd and Guangxi Colored Chestnut Mining Industry Co., Ltd, and currently existing enterprises in the industry are expanding the production and capacity for new products, both leading to processing ability of domestic general TaNb oxide far over the demand on the market. On the basis of the above factors, what do you think future development of Chinese TaNb industry?

Zeng: The new situation will stimulate more surviving ways for us. In fact, all manufactures reported that they have a difficult time to manage operation as the market is sluggish. However, existing factories are enlarging and more manufactures are coming into the industry, which indicates that there is overlapping investment leading to a waste of social resources. Nevertheless, the greatest difficulty between TaNb and rare earth industry is the source of the resource. As long as a threshold is be set to the industry, no mandatory quota of production capacity are limited to the management like the RE industry.

A TaNb company is adoptable as long as it is able to manage production and dedicate to the introduction and utilization of resources yet could not do the contribution at the expense of the environment pollution. Government and all associations are needed to supervise on the companies on the completion of environmentally protective facility and standard meeting of comprehensive utilization of resources, meanwhile provide equal conditions for enterprises to develop in the industry and on the market.

The integration of domestic TaNb industry requires market discipline rather than administrative measures as the survived enterprises definitely own distinguishing features and indicates its demand source. As a result, we have to follow the law that the market developing to find out a suitable way for our own company.

Asian Metal: Thank you again for the interview and your sustained support to Asian Metal.