Executive Interviews

Asian Metal: Welcome, Mr. Zhao. To begin, could you please introduce your company?

Mr. Zhao: Dashiqiao Dongxing Refractories Co., Ltd. was established in 2001. Its controlling company, Dashiqiao Dongrun Refractories Co., Ltd., was founded in 2008, and Yingkou Dongcheng Industrial Co., Ltd. was established in 2012. Both Dongxing and Dongrun are primarily engaged in the production and processing of synthetic refractory materials. Together, they operate nine production lines for magnesia-based composite refractory materials, including eight tilting furnaces and three cold crucible furnaces, with a total annual capacity of 60,000 tons. Our main product portfolio includes fused magnesia-alumina spinel, fused iron-alumina spinel, fused iron-alumina-magnesia spinel, fused magnesia-zirconia eutectic, fused high-chrome corundum, fused zirconia corundum, fused zirconia mullite, 99 fused chromium, fused magnesia-chrome sand, fused magnesia-iron sand, and fused alumina-chrome-zirconia. Yingkou Dongcheng Industrial Co., Ltd., a joint venture in which Dongxing is the majority shareholder, focuses on the production and processing of fused magnesia. It currently operates nine 3,150 kVA electric arc furnaces with an annual production capacity of 40,000 tons.

Asian Metal: Could you briefly review the overall price trend of fused magnesia MgO 97%min, Ca:Si=2min since the beginning of this year?

Mr. Zhao: In January and February, despite weak market demand, prices remained stable at RMB3,400–3,500/t, supported by firm production costs and expectations of rising electricity prices. Starting March 1, under the new electricity pricing mechanism, power costs increased by RMB0.15–0.20/kWh, pushing fused magnesia prices upward. Transaction prices rose to around RMB 3,750/t, with quotations briefly reaching RMB4,000/t. However, beginning in May, as domestic crude steel output declined and refractory demand weakened both domestically and abroad, prices fell by RMB150/t to around RMB3,600/t—close to the cost line. In July and August, with most producers suspending operations due to high summer temperatures, prices remained largely stable.

Asian Metal: How has market demand and producers’ operating rates evolved this year?

Mr. Zhao: The first quarter is traditionally a low season with subdued demand. However, given the anticipated surge in electricity costs in early March, most producers maintained high operating rates in January and February to build up inventory. By late February, most producers held inventories covering two to three months, with some holding even more, leading over 30% of producers to suspend production. In March, demand remained sluggish, but rising electricity prices supported price increases. In April, the U.S. sharply raised tariffs on Chinese goods, and in May–June, domestic crude steel output saw a significant year-on-year decline, further weakening demand for refractories. As a result, over 50% of fused magnesia producers halted operations, and even leading producers began cutting output. In July–August, demand remained weak in the traditional off-season, and with high summer temperatures, over 80% of producers suspended operations, while operating rates of major producers fell to less than one-third of normal levels.

Asian Metal: What is your outlook for downstream demand in the fourth quarter?

Mr. Zhao: Under the broader domestic policy of capacity reduction in the construction materials industry, demand for refractory products and raw materials will remain difficult to improve and may even contract further. In overseas markets, except for expected growth in India’s steel production, most major economies are projected to see declines. Overall, the demand outlook is not optimistic.

Asian Metal: How have the mining restrictions since last year and the electricity price hike in March affected your operations, and how are you addressing these challenges?

Mr. Zhao: Rising ore prices and higher electricity costs have significantly increased operating expenses. Following the March reform, electricity costs for fused magnesia rose by about RMB 500/t. Meanwhile, concentrate prices climbed from just over RMB 200/t early last year to a peak of around RMB 400/t. Although prices have recently eased, they remain high at RMB280–300/t.

Asian Metal: With rising production costs and weakening demand, competition in the industry has intensified. As a diversified producer, how do you plan to strengthen competitiveness?

Mr. Zhao: Our strategy focuses on enhancing efficiency and innovation by improving production processes through technological upgrades and investing in R&D to develop competitive new products. We emphasize targeted market positioning by segmenting markets, identifying key customers, and providing tailored products or services to meet specific needs. Optimizing supply chain management through long-term supplier partnerships helps reduce costs, share resources, and strengthen bargaining power. At the same time, we are strengthening brand building to increase recognition and customer loyalty, expanding sales channels through e-commerce and social media to broaden market reach, and improving internal management by streamlining processes and implementing effective incentive mechanisms to boost employee productivity and creativity. Finally, we maintain flexibility in responding to market changes by closely monitoring industry trends and customer demands to adjust strategies quickly and seize opportunities.

Asian Metal: What is your outlook for fused magnesia prices in Q4?

Mr. Zhao: Prices have already fallen to cost levels, and some producers are operating at a loss. In the second half of the year, producers will maintain low operating rates, focusing on inventory reduction. While demand is unlikely to improve, costs will continue to provide support, so prices are expected to remain generally stable.

Asian Metal: What are your company’s development plans for the next three to five years?

Mr. Zhao: Yingkou Dongcheng plans to invest RMB 100–200 million in Jiuxu Refractories Co., Ltd., a subsidiary covering 100 mu of land with an annual capacity of 15,000 tons. The company will introduce new products such as magnesia-iron-alumina and alumina-chrome-zirconia. Magnesia-iron-alumina can replace magnesia-chrome, while waste from alumina-chrome-zirconia can be recycled to extract valuable elements, conserving resources and being more environmentally friendly. We will also adopt advanced production technologies to enhance productivity and product quality, upgrade production lines with automation, and implement automated control for key equipment to improve efficiency. Furthermore, we plan to optimize workshop environment monitoring systems to ensure stability and reliability, and introduce intelligent energy-saving equipment to reduce energy consumption and improve energy efficiency.

Asian Metal: Thank you very much for sharing your insights.

Mr. Zhao: Thank you.