Executive Interviews

Asian Metal: Welcome to the interview by Asian Metal. Please introduce your company briefly.

Mr. Lv: Jiefu Corporation, a company focusing on supply of antimony products for the whole industrial chain in the earlier period after its establishment in 1993, has now become a comprehensive group company with its main business covering mining, financial investment and real estate development. Founded in 1973 as a stated-owned company in Dushan County, Guizhou Province with the former name of Dongfeng Group, Guizhou Dongfeng Antimony Co., Ltd. got an investment of RMB230 million (USD31.80 million) from Shenzhen Jiefu in 2012 for reorganization and then became a holding company of Shenzhen Jiefu Industrial Group. Dongfeng Antimony's 68.38% and 31.62% shares are now held by private companies and a state-owned company in Dushan County respectively. Headquartered in Dushan County, Dongfeng Antimony owns a large base integrating mining, dressing and smelting of antimony ores. Its holding subsidiaries include Shenzhen Jiefu Industry Development Co., Ltd., Guizhou Metals & Minerals Import & Export Co., Ltd., Dongguan Jiefu Flame-Retarded Materials Co., Ltd., Xinning Longkou Mining Development Co., Ltd., Dushan Dufeng Antimony Co., Ltd. and others. Dongfeng Antimony's main products include Dufeng brand of antimony ingot, Jiefu brand of antimony trioxide, dust-free antimony trioxide, flame retardant masterbatch and composite flame retardant, which are mainly exported to EU, USA, UK, South Korea and Japan. Having established a complete quality system and after-sales service system and passed ISO9001 international quality system certification and ISO14001 environmental management system certification, Dongfeng Antimony could produce products that meet requirements of different customers and sell well worldwide, and accordingly becomes an important production and supply enterprise in the global antimony industry with a good reputation both at home and abroad.

Asian Metal: Although the recovery of market economy in the first half of this year is not as expected, overall domestic antimony product prices are fluctuating at a high level, and stopped dropping and began to rebound since the second quarter. What do you think is the main reason for the price rebound?

Mr. Lv: I think there were several reasons for slight rebound in prices at the beginning of the second quarter. The most important reason was that antimony oxide inventory held by end users such as downstream flame retardant producers kept at a low level for a long time as they lacked confidence due to the bearish feel of the domestic economy. End users maintain purchases based upon rigid demand to avoid risk and are sensitive to price fluctuations. Once prices rebounded from the bottom, sales volume of antimony oxide factories increased by more than 50% in the short term amid the sentiment of "buying on the upside". On the other hand, market participants commonly felt bearish on the market, and most traders intended to buy antimony oxide at RMB66,000/t (USD9,128/t) or even lower prices. But when prices stabilized, some traders entered the market to make replenishments, and market sales increased significantly. Secondly, since the beginning of the second quarter, antimony ingot producers held limited stocks. From June to July, most antimony ingot factories shut down or cut production due to mid-year maintenance or insufficient raw materials, resulting in a short-term supply reduction of antimony ingot. Furthermore, after the price stalemate in the second quarter, there was limited room for antimony ingot prices to decline. Given tight supply and firm raw material costs, upstream suppliers kept prices firm. On the other hand, market participants held a cautious watchful attitude toward the issue whether U.S. and western sanctions would affect antimony concentrate import from Russia in the future, and believed that before dusts settled, prices of upstream raw materials would remain firm and the supply would be tight. In addition, at the economic work meeting held by Chinese central government, it was emphasized to better coordinate supply-side structural reforms and expand domestic demand. Chinese government vowed to create effective demand through high-quality supply and expand domestic demand via various ways and channels. All these contributed to rebounding market confidence. In the second quarter, operating rates of most downstream factories increased slowly, and market demand increased significantly.

Asian Metal: In the past year, the operating rate of domestic antimony smelters continued to set new lows. What do you think are the main factors affecting the current supply of antimony products?

Mr. Lv: I think that the operating rate of antimony products plants was indeed low in recent years. According to our preliminary statistics, the antimony ingot output in China recorded about 41,576 tonnes in the first half of 2023, and the operating rates of most antimony ingot plants just kept at 45%-55%. The main reason for the lower operating rate is that, due to the increasingly stringent national environmental protection policies and gradually rigorous safety production requirements, the operating rate of domestic antimony mines becomes low, leading to reduced supply of antimony concentrate. Coupled with unstable imports of the raw material, domestic antimony products smelters have to cut operating rate given the short supply.

Asian Metal: The end market demand is relatively sluggish this year. What do you think of the current demand for antimony oxide downstream plastics market? What are the main reasons for the sluggish market demand?

Mr. Lv: I think that due to the large fluctuations in the plastic market this year, downstream plastic plants remain very cautious in buying raw materials and basically make purchases upon demand, purchasing in small batches and not building stocks at all, while the raw material inventory of downstream end users remains extremely low. I think that there are several major factors for the current sluggish market demand. Firstly, the industry has moved out. Due to factors such as domestic epidemic policies and labor costs, many plants move to Southeast Asian countries. Secondly, the market prospect is unclear and terminal consumption decreases. Thirdly, market hotspots have shifted. In recent years, the capital focuses on the new energy industry and loses interest in traditional industries.

Asian Metal: The overall prices of antimony products keeps at a high level in 2023. Do you think this is an opportunity or a challenge for domestic antimony products enterprises? How should enterprises cope with the weak supply and demand situation in the market?

Mr. Lv: In 2023, the price of antimony products stays at a high level, which will bring huge profits and a real opportunity to enterprise with its own mine. However, for smelters, antimony oxide processing enterprises and intermediate trade enterprises, the operating risks are great because of the high raw material price but weak demand. In my opinion, in the face of weak supply and demand in the market, antimony products enterprises should try their best to control the inventory of raw materials and products, appropriately reduce profit margins, accurately grasp the market direction, and strive to tide over the difficulties smoothly without seeking high growth.

Asian Metal: How do you view the price trend of antimony products in the third quarter?

Mr. Lv: Given the current market supply situation, we believe that the overall price of antimony products will show an overall uptrend in the third quarter. On the one hand, market inventory now stands at a historically low level. On the other hand, overseas markets are expected to recover in late August after the summer break with demand picking up, which would drive up antimony price. In addition, given the National Day holiday after September, domestic end users will have to replenish stocks of raw materials, and processing enterprises and end consumers might become more interested in purchasing, which would help revive the market.

Asian Metal: According to statistics, about 37% of antimony dioxide produced domestically was exported in 2022. However, the international market runs turbulently this year. What international factors do you think substantially influence the Chinese antimony market in 2023?

Mr. Lv: As far as I'm concerned, the energy shortage at home and abroad acts significantly on the international ocean freight, and the consumption of antimony products also gets big changes upon the global epidemic and economic downturn. Meanwhile, the import costs of raw materials depend much on the exchange rates of US dollars which fluctuate badly this year. In terms of raw materials, China's import volume of antimony ore goes up slightly compared with last year, but there are still many uncertainties lurking in the supply of raw materials in the international market. The continuously high import costs of antimony ore have become the main factor supporting the prices in the sluggish market. What's more, the downstream demand plays another important role in the antimony market. The growth rate of the domestic economy missed forecasts this year, along with decreasing demand in the end market. But fortunately, foreign demand keeps stable and contributes a lot to the consumption of China's antimony products.

Asian Metal: What do you think are the competitive advantages of your company? What are the future plans for main products and business?

Mr. Lv: Firstly, we have a complete industrial chain from the mining to deep processing of antimony trioxide and thus are less affected by external factors. Secondly, we are located in Pearl River Delta, one of the most developed regions in China, which provides a great advantage in time and space costs for customers in Guangdong. Thirdly, we have a competitive advantage in export as we are one of the eleven Chinese companies with permits from the Ministry of Commerce to export antimony products. In terms of future plans, we are mainly engaged in the production of antimony trioxide and deep processing of antimony trioxide products. Amidst the growing environmental awareness around the globe, we are committed to environmental production and has developed a world leading dust-free deep-processing technology for antimony trioxide products such as DOTP\EG and PE\EVA.

Asian Metal: Thanks for sharing with us and we wish your company a greater success!