Asian Metal: Thank you for joining us, Mr. Ma, please introduce your company briefly.

Mr. Ma: Tianjian Silicon Industry was established in May 2011, and we're located in Xiachuankou Industrial Zone in Minhe County, Qinghai provine. Our register fund reached RMB2.6 million. We mainly produce ferrosilicon, silicon metal or especial alloys. We are the one of few ferrosilicon producers who focuses on ferrosilicon 75%min in Qinghai, and currently supply the material to magnesium ingot plants.

Asian Metal: How about your company's annual production capacity and the current monthly output?

Mr. Ma: We have two furnaces of 25,000kva in total, and the annual production capacity is 40,000t, and we could produce 3,500-4,000tpm regularly, but we're at off peak running now, and we can reach around 2,200tpm currently.

Asian Metal: Compared with February and March, the current ferrosilicon demand is strong, how about the sales performance from long term clients and spot market？

Mr. Ma: We couldn't finish all the singed orders until late June. We mainly sign long-term contracts with magnesium ingot plants which accounts for 80% of our whole sales volume, and the orders from spot market accounts around 20%. We could supply 400-500tpm to spot market. Restrained by COVID-19, the demand began to shrink from early March, and we turned to off-peak production since that time. But we insisted on regular production based on active purchases from old clients before March when most of other ferrosilicon producers in Qinghai turned to off-peak production.

Asian Metal: We know Tianjian mainly produces ferrosilicon 75%min, and would you briefly tell me what makes you stand out in the market?

Mr. Ma: We strictly check the quality of raw material every time. Take silica ore for example, we filter out some impurities such as earth out of silica ore when it was mined, and we will do double filter before the silica ore was poured into furnace. The less impurity makes the better appearance and quality of ferrosilicon. We use silica ore with silica content above 98%min, and our silica ore purchase price is around RMB5-10/t (USD0.7-1.4/t) higher than standard one, and our current purchase price of silica ore is RMB115/t (USD16/t) delivered.

Asian Metal: How about other raw materials prices and price trend except silica ore？

Mr. Ma: For one ton of ferrosilicon 75%min, we need two tons of silica ore. We usually purchase from local Qinghai such as Minhe, Ledu counties, and price of silica ore is relatively stable as almost silica ore mining hold the stable output around 2,000-3,000tpd. We keep 20,000-30,000t in stock for at least three or four months' consumption. The hardness of silica ore in Qinghai is much better than that in Ningxia and Inner Mongolia.

For other raw materials, such as semicoke, we use 1.3-1.4t of semicoke. The standard price for semicoke is RMB500-570/t (USD70-80/t) EXW D/P, and our buying price is RMB570/t (USD80/t) even though the bottom level one is good enough. The better semicoke, the better refractoriness. Price of semicoke is showing uptrend supported by the price increase of RMB20/t (USD3/t) for mine coal.

We're using oxide scale instead of steel scrap, and the current price of oxide scale is RMB1,100t (USD154/t), slightly up by RMB100/t (USD14/t) from late last month.

Asian Metal: There is a rumor that the power cost would edge down in Qinghai, and will you switch off peak production to regular production if it becomes true, ?

Mr. Ma: It takes about 8,300KWH which was charged at RMB0.38/KWH (USD0.053/KWH) to produce one ton ferrosilicon 75%min in day time, while it takes around 8,600KWH which was charged at RMB0.29/KWH (USD0.041/KWH) at night. There is a rumor that the electricity cost would be adjusted down to USD0.35/KWH (USD0.049/KWH) for regular production in day time, but we prefer to produce at night as the regular production cost is about RMB300/t (USD42/t) higher than off peak production. We are selling at RMB5,550/t (USD784/t) EXW D/P for ferrosilicon unprocessed lump. When the price reaches RMB5,800-6,000/t (USD819-847/t), we would turn to regular production.

Asian Metal: Tianjian mainly supplies ferrosilicon 75%min to magnesium plants, and how do you evaluate the current ferrosilicon demand from magnesium ingot plants?

Mr.Ma: We supply over 80% of our ferrosilicon 75%min to magnesium plants, and export volume accounts less than 20%. Our clients scattered around Xinjiang, Shaanxi, Shanxi and Ningxia. Their purchases volume began to shrink since early March. For example, one client usually purchases 500tpm but he decreased to 300tpm since March. The demand from Shanxi and Xinjiang didn't decrease obviously, but the demand from Fugu Shaanxi decreased a lot. We turned to off-peak production since early March.

Asian Metal: What's your prediction about the future demand from magnesium plants?

Mr. Ma: After suffering demand shrinkage in April and May, currently most magnesium plants hold stable operation rate, and I suppose the ferrosilicon demand from magnesium plants in June would rebound slightly as the ferrosilicon price already touched the lowest point this year. Some end users already replenish stocks step by step. Additionally, the demand of magnesium ingot would recover gradually with the eased COVID-19 situation in overseas market, so the ferrosilicon consumption would climb.

But in long term, I believe prices of ferrosilicon 75%min is hardly to edge up restrained by increased supply in late June as more and more ferrosilicon plants would resume stimulated by better profit by then, and I suppose prices of ferrosilicon 75%min would narrowly fluctuate at the current price level. Our current selling price of ferrosilicon 75%min unprocessed lump hovers at RMB5,500-5,600/t (USD777-790/t) EXW D/P.

Asian Metal: Upon the solid demand from steel mills, do you consider increasing ferrosilicon 72%min output? What's your company's next step?

Mr. Ma: We still focus on ferrosilicon 75%min rather than ferrosilicon 72%min or other ferroalloys because of our long-term clients. We always intend to expand our ferrosilicon capacity, but we didn't get the approval from the government to establish new furnaces. We try to purchase furnaces when the opportunity comes.

Asian Metal: Thank you Mr. Ma.

Mr. Ma: Thank you.