Asian Metal: Thank you Mr. Ho for joining the interview, and please introduce your company briefly.

Mr. Ho: Asia Minerals Limited (AML) was established in Hong Kong in 1993, starting with manganese related business, and our company is one of major shareholders of the ferroalloys plant in Malaysia - Pertama Ferroalloys Sdn. Bhd. (Pertama). Pertama is the first large-scale manganese alloys and ferrosilicon plant in Malaysia, which was founded in the Samalaju Industrial Zone in Bintulu of the Sarawak State, occupying around 200 hectares of land. Pertama owns three furnaces of 33,000kVA to produce ferrosilicon with the average monthly output of around 5,000t with clients in Asia, Europe and the United States. The plant has another three furnaces of 33,000kVA to produce silicomanganese.

Asian Metal: What's your approximate supply amount in Asia, North America and Europe respectively?

Mr. Ho: Basically, we supply around one fifth of the whole monthly output to the United States to our long-term clients who are the end users, and over half to Asia and Europe. We also supply small amount to Europe.

Asian Metal: How about the ferrosilicon demand performance in Asia in Q1-2021 against Q4-2020 and Q1-2020?

Mr. Ho: For our company, we saw the ferrosilicon sales volume increased slightly in Q1-2021 against Q4-2020, especially in South Korean and Japanese market. We got more orders from major steel mills in Q1-2021 against Q4-2020t. The demand in Southeast Asia keeps stable in Q1-2021 against last quarter and Q1-2020. We approximately sold 14,500t in Q1-2021 in total, up by about 1,500t against that of 13,000t in Q1-2020. The totaled sales volume in Southeast Asia reached around 5,000t in Q1-2020, in line with the same period last year.

Asian Metal: How do you think the ferrosilicon demand in Q2 in Asia?

Mr. Ho: As I mentioned above, the major steel mills in South Korea send some inquiries to do replenishment, and the demand in Japan also increased. The data released showed that Japan recorded an output of about 7.47 million tons of crude steel in February, down by 5.6% year on year and down by 5.7% month on month. Although Japan's crude steel output in February stayed lower than the previous month, the average daily output rose by 4.4% from 256,000 tons in January to 267,000 tons in February. The ferrosilicon demand in Japan in Q2 would obviously increase against last Q2. Additionally, the demand from other Asian countries would also increase driven by the increasing prices of steel products , and I believe the overall demand in Asia would rise.

Asian Metal: what are the advantages and disadvantages of the production cost for Malaysia-origin compared with the China-origin ferrosilicon?

Mr. Ho: We signed the long-term contract with the local power supply administration, and the average charge is USD0.04/kWh. So far as I know, the power charge of State Grid Corporation of China stands at USD0.06-0.07/kWh, so our electricity cost is lower than Chinese one. But we rely on import to get raw materials such as silica ore, semi coke, scrap steel, which restrains our production to some extent. Taking silica ore and semi coke for example, we mainly import these materials from China and India, and we went through raw materials' shortages supply when the COVID-19 swept Asia in Feb and Mar in 2020.

Asian Metal: Some Chinese ferrosilicon exporters sell ferrosilicon with VAT but someone sells without VAT, and does your company weight Chinese ferrosilicon export price? Which type of prices do you take into consideration most when you adjust prices?

Mr. Ho: Currently, our ferrosilicon 75%min export prices hover at USD1,550-1,600/t CIF Asian major port (in the middle of March) , and we take Chinese ferrosilicon export prices with VAT into consideration when we adjust our prices, and we also take some other international suppliers' prices into consideration. As we have stable clients in Japan, South Korea and other countries in Southeast Asia, we can close deals easily at USD1,550/t CIF based on our tight spot supply, therefore, we don't need to weigh the Chinese ferrosilicon prices without VAT upon our limited monthly output.

Asian Metal: The Chinese Inner Mongolia government conducted energy consumption reduction policy in March, resulting in the ferrosilicon supply decreased. Consequently, the export prices of Chinese ferrosilicon increased in early March. How do you see the ferrosilicon price trend in Asia in Q2 based on the experience?

Mr. Ho: As Chinese government conducted the production suspension policy in Ningxia for several weeks to all the ferrosilicon plants in Ningxia, one of major international ferrosilicon suppliers drove prices to USD1,800/t CIF Asia at that time. However, this year the price of ferrosilicon 75%min in Asia would probably not reach USD1,800/t CIF Asia as the supply cut in Inner Mongolia turned out to be lower than expected, accounting around 10% of the whole output in Inner Mongolia(according to Asian Metal's database), which is far lower than that several years ago. However, along with the increasing demand in Japan, South Korea and other Southeast Asian countries, I believe Chinese ferrosilicon export prices with VAT and other international suppliers' prices would increase in Q2.

Asian Metal: Pertama mainly supplies ferrosilicon to Asia and also supplies to the United States. Please share your opinion about the current demand and prices trend in the US and Europe and how does the demand performance in these two regions influence the ferrosilicon supply in Asia?

Mr. Ho: The United States is one of major markets that we focus on. Every quarter, we have 2,000-2,500t of ferrosilicon delivered to the US by vessel. Since Q3-2020, the operation rate of steel mills in the US keeps increasing, and it already recovered to around 77% in February, which is almost in line with the same period last year. Our regular clients' purchase amounts also increased step and step. The current price of ferrosilicon 75%min 10-50mm in Europe stands at EUR1,500/t (USD1,770/t) D.D.P, and European traders keep slight stocks now because we frequently get inquiries from European traders recently. Additionally, some ferroalloys plants stopped production in Q2 and Q3 last year, and the current ferrosilicon supply in Europe obviously keeps tight. I believe price of ferrosilicon 75%min 10-50mm in the US and Europe would keep increasing for several weeks, which would drove international suppliers to increase the supply to these two regions, consequently, the supply in Asia from these suppliers would decrease relatively under the condition of their stable output, pushing ferrosilicon prices in Asia to go up indirectly.

Asian Metal: Does your company have plans to increase ferrosilicon capacity or do you have some other new plans?

Mr. Ho: We don't have plans to increase ferrosilicon capacity at the time being. What we will do is to maintain our stable quantity and quality to our regular clients.

Asian Metal: Thank you for joining our interview, Mr. Ho.

Mr. Ho: Thank you.