Asian Metal: Good morning, Mr. Cai. Thank you for accepting the interview of Asian Metal. Firstly please make an introduction about your main business and production.

I’m glad to receive the invitation of Asian Metal and let me make a brief introduction about Wuhan Xinrong New Materials Co., Ltd. Our company mainly engages in the production of high purity metal materials. At present, our products include high purity tellurium, high purity cadmium, high purity indium, high purity germanium, high purity gallium, high purity bismuth, high purity antimony, high purity sulfur, high purity tin and other metal elements and compounds. Most of our business was about tellurium, indium, germanium and sulfur in the first half of 2017.

Asian Metal: Thank you for your brief introduction. I think that market participants are interested in yourself and so would you like to give us a basic introduction about yourself?

I come from Wuhan and have graduated from School of Economics of Wuhan University of Technology, which is not much related to metal material industry. But partners of our company, two of my classmates in university, are doctors about material science, Doctor Lu and Doctor Hu. Thus, our team can be said to be professional in terms of background.

I just worked for others for three months after I graduated from university and then did business for myself. My first business was about consultation, but I had to give it up five years later due to changes of times although I like it very much. The second business was about alloy material and it lasted from 2011 to 2014 when I processed auxiliary materials for electronic enterprises and military industry enterprises and learned rich experiments in production, management and operation; but I also gave it up at last as I decided to develop my own core technology rather than just process materials for others. I have been involved with many minor metal materials during the business of alloy materials and thus I decided to return to Wuhan to do business of high purity metal materials after 2014. Before this, Mr Lu and Mr Hu had worked in solar material field for 5-10 years, which laid solid technology foundation for the cooperation among us.

Thus, generally speaking, I have 3 sections of business history of my own and I think the current business will be my final business as it can fight against overseas enterprises and we want to do a leader in material field in the future as a national enterprise.

Asian Metal: Your company is a newly emerging company for comprehensive high purity new material and market participants generally hold an optimistic attitude towards your company, so please tell us your advantages in production.

We mainly depend on platforms of National Key Composite Material Laboratory of Wuhan University of Technology and Wuhan National Laboratory for Optoelectronics which offer technology and background supports for us and thus we have unique advantages in research, costs and experiment. There are many scientific institutions in Wuhan which use high purity metal material in experiments and used to mainly purchase the material from overseas suppliers as domestic plants had difficulties in making their products reach over 6N. Driven by the demand from institutions and universities in Wuhan, we can produce ultra-high purity metal material of over 6N.

I think that universities in Wuhan are very centralized, only ranking second to Beijing. Thus, we can take this unique advantage to own many talents at low costs. Besides advantages in region and costs, we also have some experiment platforms which were beneficial for us to do research in previous phase. We mainly produce high purity materials and have many advantages in production and research, which make our prices of many products more competitive than those of other countries.

Asian Metal: Your company mainly engages in minor meal products. Do you have some particular emphasis on your products?

We emphasize the development of indium, germanium, tellurium, sulfur, antimony, tin and bismuth now. All of the above products are related to each other. For example, there are many scientific institutions and universities in Wuhan which mainly use high purity tellurium, high purity gallium, high purity indium, high purity antimony and other series of high purity metal products. In addition, photoelectricity enterprises and semi-conductor enterprise in Wuhan are also very centralized and also use tellurium, indium, antimony, tin and other products. Thus, we usually develop our products based on the demand and requirement of these institutions and universities.

Asian Metal: As we know, environmental inspection has been stricter and stricter in recent two years. What kind of influences has it brought to your company which mainly engages in high purity products?

Seeing from production, high purity materials don’t cause serious environmental pollution problems as they make almost no discharges. Our products are produced in clean environment and we have very strict requirements on environmental protection. In addition, we conduct comprehensive treatments on all of our materials. Thus, the environmental inspection hasn’t brought big influences on our production.

However, the stricter environmental inspection has brought big influences on the production of upstream raw material, resulting in tight supply for raw material. Due to the supply shortage for raw material, we are inclined to sign long-term contracts with suppliers in order to guarantee the supply volume and price for raw material. In addition, we will make storages for raw material and conduct production with the material stored by us when the supply is tight in the spot market.

Asian Metal: What kind of minor metal do you think will stand out in the second half of 2017?

I think prices for tellurium metal and germanium metal will be likely to go up in the second half of 2017. Based on the supply and demand relationship, we expect that prices for the two kinds of materials can be more than RMB500/kg in the second half of 2017. It’s hard to evaluate prices for indium metal now as selling prices for the material have been closed to production cost line with possibility to fluctuate slightly but with no room to increase substantially.

Asian Metal: As learned by Asian Metal, your company has also made layout in overseas market. Would you like to analyze the advantages and disadvantages of the export market of China?

Let’s take tellurium and germanium as examples. Prices for tellurium raw material are much low in the overseas market now while the demand is very strong in the domestic market with tight supply problem. Chinese buyers used to look for raw material from overseas market and then exported the finished products; however, we basically make no exports now and mainly do import business as export prices have declined substantially since the price increase of tellurium after the sharp decrease of RMB180/kg.

Prices for germanium metal in the domestic market were once higher than those in the overseas market for a long time. Because germanium prices touched the bottom line in 2016, overseas buyers refilled stocks. With tight supply and increased demand in the domestic market, germanium prices recovered and increased continuously, which made prices in the domestic market were RMB1,000/kg higher than those in the overseas market. Domestic producers were reluctant to sell at low prices and thus it’s still possible to export the material if the demand in the domestic market and overseas market is same. Due to seriously tight supply for raw material, plants are cautious in accepting spot orders besides long-term orders or orders from regular customers.

Asian Metal: Lastly, please let us know something about the development direction of your company.

In terms of overall layout, we will develop the market in both home and abroad. We have gradually undertaken the domestic layout and will attach importance to the market in both home and abroad at the same time in the following 1-2 years.

The development orientation of our company is the research and production of high purity material and we will probably step into 1-2 major products in the future in connection with the upstream, midstream and downstream condition. We consider to construct plants to meet our demand for raw material and reduce the threat in supply of raw material resulted from price fluctuations in the market. As for the downstream products, we will stimulate the development of metal elements and metal compounds in the future and aim to become a leader in minor metal elements and compounds in order to make contributions to the development of national enterprises.

Asian Metal: Thank you once again for accepting the interview of us. Wish your company a better future!