Executive Interviews

Asian Metal: Hello Mr. Wang, thank you for accepting the interview by Asian Metal. Please introduce your company firstly.

Mr. Wang: Our company entered the indium industry since 1986, mainly producing indium ingot with a grade of 99.995%min. Indium ingot 99.995%min is mainly used in the industry of semiconductors, and the terminal industry is LCD panel. At the same time, we could recycle indium from indium-containing waste ITO targets and LCD panels. Currently, our company could produce 25tpm of indium ingot 99.995%min with a production capacity of 300tpy, which is in a leading position in China. Among the 25tpm of indium ingot 99.995%min, 50% of the raw materials come from the recycling of indium-containing wastes. About 100t of indium-containing wastes could be processed a month. The recycling capacity of waste indium is also in a leading position in China.

Asian Metal: As we know indium is a kind of rare metal of which the raw material comes from various minerals, and the sources of raw materials are scarce. What are the main sources of raw materials of your company and what is the proportion?

Mr. Wang: At present, indium ingot 99.995%min could be divided into primary indium ingot and secondary indium ingot according to different raw material sources. The main raw materials of primary indium ingot are indium-containing slags from lead and zinc producers and various comprehensively recycled indium-containing materials. The main raw materials of secondary indium ingot mainly come from indium-containing waste ITO targets in ITO target plants. In the past two years, the proportion of Shaoguan Kaidi's primary indium production kept decreasing year by year and that of secondary indium ingot production kept increasing. Taking the output in 2021 as an example, the indium ingot 99.995%min output reached about 230t totally, among which the primary indium output was about 100t, and the secondary indium ingot output reached around 130t. The crude indium 98%min supply channel and quantity remained unchanged in the past two years and the annual purchase volume stayed stable. However, we noticed that the channels and quantities of recycled indium raw materials stay increasing because the production capacity of the ITO target keeps gradually transferred especially from Japan and South Korea to China, and it increases very fast yearly. We concluded that in 2021 the output of secondary indium ingot produced from indium-containing waste ITO targets was not stand lower than 200t, and we expect the output would no less than 250t in 2022. The volume of processing orders of indium-containing waste ITO targets brought by localization would continue to grow gently in the coming five years.

Asian Metal: As a major recycler of indium-containing waste ITO targets, what are your advantages on pricing and smelting?

Mr. Wang: In fact, the current advantage on pricing of indium ingot 99.995%min in China is not controlle by the producers. Over the past years, the raw materials used for waste processing, such as hydrochloric acid, increased exponentially, and the labor cost also moved up year by year. In addition to inflation, although our output reached more than 200t in 2021, our profit was meager. We would like to increase the TC but the effect is very little. We think that it depends on indium ingot 99.995%min supply and demand in the market. Now the competition is very fierce and it is very difficult to increase the TC, so we are facing a passive situation. At present, producers mainly refine indium ingot 99.995%min by traditional wet smelting methods. We are currently using a combination of traditional wet smelting method and vacuum furnace smelting method for production.

Asian Metal: What do you think of the demand outlook for indium ingot?

Mr. Wang: At present, the indium ingot demand is divided into two kinds, one is for consumption and the other is for speculation. The actual consumption demand stays rising steadily every year with the gradual domestication of ITO target materials. We expect that the consumption would reach about 700-800t a year. As indium ingot 99.995%min is one of the basic materials of semiconductors, the government is vigorously promoting the development of the industry. In terms of the production and processing of semiconductors, our country has obvious advantages on the raw material and labor. With the domestication of the ITO targets, we expect the consumption demand for indium ingot 99.995%min would grow steadily with an annual growth rate no less than 10%. The demand for speculation has a great impact on the price fluctuation of indium ingot. Speculators lower or raise the indium ingot 99.995%min prices indefinitely according to their own needs, which brought sensitive mentalities to the spot market. But in general, and the inventory of speculators on the trading platform kept increasing.

Asian Metal: As you said that the Chinese indium ingot downstream consumers’ demand remains stable, but the large fluctuations of indium ingot prices are mainly caused by speculation, how do you view the violent fluctuations of indium ingot prices caused by speculative demand?

Mr. Wang: When it comes to the formation of indium ingot 99.995%min prices in the recent years, the Fanya Exchange played an important role because it pushed the indium ingot prices up. The price increase simulated the infinite expansion of production capacity in China, resulting in the high social inventory till now. Based on the requirements of production costs, indium should be produced with the raw material whose content of indium is more than 4kg/t, but before 2015, due to high indium ingot prices, many producers even chose to process slags containing 1kg/t of indium. All low-grade raw materials were used up then. Now the raw material for producing crude indium is the slag produced in the same year. so the supply of raw materials is tight. The raw material prices keep rising, and the cost of auxiliary materials and labor stays high. It is undeniable that the demand for speculation still has a positive effect on the spot market because it brings more deals. Otherwise, indium ingot prices would go down further to the cost line due to the oversupply in the recent years.

Asian Metal: Since the beginning of 2022, the prices of crude indium stayed firm, while the indium ingot 99.995%min market remained soft. What do you think are the factors causing this situation?

Mr. Wang: Since early 2022, crude indium supply remained stable and the prices also stayed firm, so we hold optimistic attitudes about the future price trend of indium ingot 99.995%min. However, the large social inventory is still the main contradiction that the market faces, and is also the main resistance of indium ingot 99.995%min prices to continue to rise. In addition, though the demand for speculation is against the real market, it has given the indium ingot a monetary attribute to some extent, which could　　cope with the social inventory. We expect the output of primary indium ingot 99.995%min in China would remain stable in 2022 and would not record more than 500t totally. Overall, the output of indium ingot 99.995%min has not increased, and the demand keeps increasing every year. We believe that the trading volume of indium ingot 99.995%min would continue to grow over time.

Asia Metal: How do you think of the price trend of indium ingot during the fourth quarter in 2022?

Mr. Wang: We hold bearish attitudes towards the price trend of indium ingot in the fourth quarter of this year. At present, the downstream consumers' demand keeps gradually weak. The panel industry, which is the main application field, witnessed a production reduction by around 40% YoY. In addition, around 50t of social inventory was auctioned at RMB1,115/kg (USD154/kg) in early October, which made insiders lose confidence. Therefore, we forecast that the prevailing prices of Chinese indium ingot 99.995%min would show a downtrend to about RMB1,200/kg (USD166/kg) in Q4.

Asian Metal: Please give us a brief introduction of your company's development plan in the next three years.

Mr. Wang: In the next three years, we would continue to root in indium ingot production, and focus on improving our quality of primary and secondary indium products. In addition, we would pay more attention to the procurement process, and strive to reduce the cost and to achieve full and steady operation of 25tpm as soon as possible.

Asian Metal: Thank you for your wonderful sharing! Wish your company further success!

Mr. Wang: Thanks agian for the invitation from Asian Metal.