Asian Metal: Good day, Mr. Kim. Thank you for granting this interview. Could you please give us an introduction to your company, yourself included?

Kim: Ownership of Sinometal (Shanghai) is partly held by Shanghai Zhuodai Industrial and Trading Co., Ltd., while we also manage Hunan Huitianran Metallurgy Co., Ltd., mainly dealing in manganese alloys, manganese metals, manganese ore, iron ore and other steel raw materials. In the case of manganese metals, we have our own manganese briquette and manganese lump plants, with a total capacity of 4,000tpm. Our business turnover reached RMB750 million in 2013. I have been working in China for over ten years, taking charge of the afore-mentioned businesses.

Asian Metal: The steel market has remained sluggish in China this year. What do you think about the overall situation?

Kim: 2013 was “The Year of Crisis” for Chinese steel plants. And steel prices have so far dropped by 10% in 2014; however, the losses among the 88 large and medium steel plants have been reduced, with only 15 of them still suffering losses. This is thanks to the even greater decreases for raw materials like iron ore and coal, whose prices are witnessing a slump of 37% and 26% respectively, at the moment.

Asian Metal: But manganese metal suppliers are claiming that steel plants require more time to make payments, which is placing much more financial pressure on them. What is your opinion?

Kim: It’s true. Although business conditions are a bit better for the steel plants, the market is still experiencing hardships this year. So the steel plants are continually lowering the cash ratio and lengthening their payment periods when purchasing raw materials. Moreover, the oversupply in the manganese metal industry appears to be more serious than that in the steel industry, resulting in the capacity being 2.5 times actual demand. Consequently, manganese metal suppliers are having to accept adjustments to the payment terms from steel plants in order to maintain cooperation with the latter.

Asian Metal: The Chinese manganese metal export market has been performing better than the domestic market in 2014, yet some suppliers are making transactions improperly in order to gain a price advantage. Will your export business be affected?

Kim: Absolutely. The export prices of some suppliers were obviously much lower than the normal cost price in 2013, judging from the China Customs data. And increasing quantities of manganese metals have been exported using these illicit methods so far in 2014. Therefore, normal exporters such as ourselves are losing most of the orders from overseas consumers due to the price disadvantages. I would like to take this opportunity to urge the relevant departments to strengthen supervision and make improvements to the export environment.

Asian Metal: Of the leading destinations for Chinese manganese metals, South Korea has seen demand increase a lot in 2014. What are the main reasons for this?

Kim: POSCO, Hyundai Steel and POSCO Special Steel are the three key end users of manganese metals, while demand from other consumers is quite limited. I believe that the increases in purchasing quantities have mainly come from POSCO, which has a wide range of steel businesses. The company has increased production of the various steels which require manganese as one of their vital materials, so demand has risen accordingly. It is predicted that the annual demand volume for manganese metals from POSCO will reach to 50,000t in 2015. However, it is worth noting that the company can replace manganese metals by using ultra micro carbon ferromanganese, and if the prices for the latter are more competitive, purchasing of manganese metals will be reduced.

Asian Metal: Although the business has been affected by illicit exports, Sinometal has still gained a strong foothold among manganese suppliers. How have you managed this?

Kim: Firstly, we manage Hunan Huitianran Metallurgy Co., Ltd., and produce manganese briquette and manganese lump ourselves, providing a good funding base which allows us to run the business steadily and smoothly. Secondly, we work in long-term cooperation with reliable suppliers, ensuring security of product supply and the competitiveness of our quotations in the market. Moreover, we have established a mutual customer relationship with some of the Chinese steel mills, from which we also purchase steel products for export when selling them manganese metals. So it is more convenient for us to communicate and maintain steady cooperation with them.

Asian Metal: Do you think the Chinese manganese metal market will see many fluctuations during the remainder of 2014?

Kim: I believe the mainstream prices of Chinese manganese flake will remain in the range of RMB12,500-13,000/t (USD2,045-2,127/t) up until the end of 2014. This is because demand from Chinese and overseas end users is likely to be flat in general with small and medium-size manganese producers unwilling to take the risk of expanding production in the last two months of the year. In the case of larger plants, only Chongqing Wujiang Industry Group will add to its production in November, but the output from its new plant in Songtao, Guizhou will be very limited during 2014 due to preliminary debugging.

Asian Metal: What are your expectations for 2015?

Kim: The Chinese manganese metal market is counting on the situation at downstream steel mills improving. Iron ore prices are very likely to drop further in 2015, and although the steel price will in turn fall, I maintain a cautiously optimistic attitude, since the costs at steel mills may see even larger decreases. Nevertheless, the possibility of China removing the export rebates for steel products in 2015 will heap still more pressure on the plants’ sales , so any new policies adopted by the government will continue to have a great impact on the steel and manganese markets. Therefore, we will make a safety-first approach our operational priority and seek out any good opportunities whenever the business conditions turn better in the coming year.

Asian Metal: Thanks for your time in giving this interview and we wish your company a bright future.