Asian Metal: Hello, Mr. Wang! Thank you for your interview with Asian Metal, Please introduce your company first.

Mr. Wang: Inner Mongolia Chahar Youqian County Mengfa Ferroalloy Co. is a private enterprise specializing in the production of ferromanganese, especially in the production and operation of HC, MC, and LC ferromanganese. After 17 years of development, the company has grown from a ferroalloy trading company to a production enterprise with world-class equipment and professional management team in the manganese alloy industry with output of 180,000 tons of high carbon ferromanganese and 60,000 tons of medium and low carbon manganese annually. The company has not only successfully passed the ISO9001 quality management system certification, but also become a benchmark enterprise in the industry in terms of safety and environmental protection. The company has a 30,000kVA fully enclosed high carbon ferromanganese submerged arc furnace, a 42,000kVA fully enclosed high carbon ferromanganese submerged arc furnace, a 25 ton CLU oxygen blowing refining converter imported from Sweden UHT company. There is also a 45 square meters belt sintering machine with an annual output of 450,000 tons of manganese sinter.

Asian metal: In August 2020, your company transformed the ore furnace for siliconmanganese production into one for high carbon ferromanganese production. How is the current progress?

Mr. Wang: We stopped siliconmanganese 65/17 production on August 10th, 2020 for equipment transformation of the submerged arc furnace of 33,000kVA into a submerged arc furnace of 42,000kVA to produce HC ferromanganese. To call it transformation, I would rather say it a reestablishment. We changed the submerged arc furnace of 33,000kVA from a semi-enclosed furnace to a fully-enclosed one. During the transformation process, we referred to the opinions of many well-known experts from all over the world in accordance with the characteristics of HC ferromanganese smelting to optimize the important parameters of the furnace. The reformed furnace is the biggest high carbon ferromanganese ore furnace with the highest level China. It not only improves the production capacity, but also achieves the best performance in environmental protection in China. The transformation period lasted nine months, and the transformation was completed in early May 2021. The furnace started ignition on May 15, and the production of high carbon ferromanganese officially begins in early June.

Asian metal: After transformation, how many submerged arc furnaces do you have to produce high carbon ferromanganese? What's the change in output? Facing the current market situation, do you have any new business layout and adjustment?

Mr. Wang: After the transformation is completed, our annual production capacity reaches 250,000 tons. The main productss are HC ferromanganese Mn 70%min, C 7%max and HC ferromanganese Mn 75%min, C 8%max. We have totally a submerged arc furnace of 30,000kVA and a submerged arc furnace of 42,000kVA to produce high carbon ferromanganese. After the transformation, our monthly output of high carbon ferromanganese can reach about 20,000 tons, of which 5,000 tons are decarburized into low carbon ferromanganese by the refining converter. With regard to the latest business layout, we have signed long-term agreements with steel mills such as TISCO, Baosteel, Wuhan Iron and Steel, Ansteel, Benxi Steel, etc. After the completion of the transformation, we plan to further expand the business cooperation with large domestic steel mills.

Asian metal: Please simply analyze the current market status of high carbon ferromanganese.

Mr.wang: In the first half of this year, high carbon ferromanganese market is basically in a state of balanced supply and demand. At present, the monthly production of high carbon ferromanganese in China is about 90,000 tons, and the monthly demand of downstream is nearly 90,000 tons. Therefore, the prices remained stable before the end of May. However, due to the rising prices of coke and manganese ore in the past month, the cost increased a lot, so most suppliers lifted the prices. In addition, producers reduced production due to nationwide power restriction and environmental protection, so the spot market saw tight supply. From the perspective of the impact of upstream raw material prices and market supply, even if the demand is stable, the price of high carbon ferromanganese in the third quarter will still maintain an upward trend.

Asian metal: Since the beginning of this year, Inner Mongolia continued to introduce production limit policies, facing this situation, what do you think of these policies?

Mr. Wang: The state has introduced the energy consumption double control policy, which will play a great role in promoting the healthy development of the industry. Ferroalloy enterprises must change from the traditional extensive development mode to the direction of optimizing equipment, improving technology and developing circular economy, and gradually become resource-conserving and environment-friendly production enterprises. Elimination of backward production capacity from the surface, it does feel that there will be a certain impact on the output of enterprises, but the policy is only for companies with small furnaces. The mainstream production enterprises of high carbon ferromanganese has very few small furnaces, so in fact, the impact on the output is not big. But actually such policy can reduce the disorderly competition in the industry to some extent. On the other hand, enterprises should consider how to develop the circular economy and pay attention to the extension of the industrial chain. In our view, production scale is not an absolute advantage. What is important is to focus on how to improve the optimization of the industry, rather than just on increasing production capacity.

Asian metal: At present, we have learned that the in-port inventory of manganese ore is under great consumption pressure, and it is expected to run down to the regular levels until at least the fourth quarter. Do you think high ore stocks will affect the price of high carbon ferromanganese?

Mr. Wang: The high ore inventory is bound to affect the price of ore. If the price of ore drops, the price of alloy will also be partially affected, but the price of manganese ore is only a small part of the influencing factors for the price of high carbon ferromanganese. The price of ore mainly depends on the change of supply and demand and the policy factors of the country. The ore inventory has been gradually increasing since the end of the second quarter of last year. According to statistics, the ore inventory at the port is about 7 million tons at present. However, the price of high carbon ferromanganese is still changing according to supply and demand from last year until now, and is not too affected by the ore price.

Asian metal: What do you think of the high carbon ferromanganese market in the second half of the year? Could the price remain firm in the second half of the year?

Mr. Wang: Since the beginning of the year, the price of bulk commodities has been rising, but the high carbon ferromanganese prices have not been soaring along with it. According to the historical prices in previous years and the production cost of high carbon ferromanganese, the current price is actually still at a low level, so we think the price still has room to rise. The overall market this year is basically in a state of balance between supply and demand. In the second half of the year, the price is expected to remain around RMB6,200-6,400/t (USD976-1,007/t) EXW D/P if there are no major policy factors or the influence of macroeconomic factors. In addition, the price is expected to remain firm in the second half of the year with the support of firm costs.

Asian metal: Could you give us a brief introduction of your company's development plan in 2021?

Mr. Wang: we will vigorously develop circular economy by building white ask kiln and waste-gas power generation projects to realize full recycling and using of the coal gas generated by the furnace; We will also build shaking package and finery to achieve dilution of rich-manganous slags and burning slag. By sufficient exploration of current resources, we will decrease the unit energy consumption to promote economic effectiveness. The ultimate goal of the company is to realize the whole process of hot charging production integrating ferroalloy, small variety special alloy steel and customized casting products, and finally realize the high-tech enterprise of short process steelmaking of small variety special steel.

Asian Metal: Thanks for your wonderful sharing! Wish your company further success and promotion step by step!

Mr. Wang: Thank you! I wish Asian Metal much better!