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    China's silicon metal powder market demand expects significant growth
    ----Interview with Zhao Wang
    General Manager
    Wuhan Wallpark Silicon Materials Co.
    Wuhan Wallpark Silicon Materials Co. was founded in 2004 and is a professional group company dedicated to high quality silicon material products. With its wholly-owned subsidiary "Wuhan Huabai Sunshine Silicon Materials Co." as the core, the group has carefully built a comprehensive silicon powder processing base integrating research and development, inspection and analysis, production and processing, and warehousing and logistics, which can guarantee the supply of 50,000 tons of high-quality main raw materials - silicon metal lumps and silicon powder for various silicon manufacturers annually. In the nearly 20 years of close cooperation with many famous Japanese manufacturers, the group has been praised for its excellent quality, stable supply ability and comprehensive performance ability, and has been awarded the "Special Silicon Material Supplier" and has established its status as the main supplier and established a good brand image.

    Asian Metal: Thank you for joining us Mr. Wang, please give us a brief introduction of your company.

    Mr Wang: Our company was founded in 2004, and has nearly 20 years of history since then. OCI started purchasing silicon metal powder from China in 2008, and Wallpark was the first supplier in China, with a maximum of nearly 20,000 tons annually, opening a door for Chinese silicon powder enterprises in the export market, and then as a stable supplier of OCI, Hanwha and Tokuyama for a long time. The company has four production lines with an annual capacity of 50,000 tons of silicon metal powder. Our company owns more than 50 acres of land in Wuhan Yangluo Terminal, and our company has 15,000 square meters for factory and office in total. We also invested in an upstream silicon metal plant in Huaihua, Hunan Province in 2008, and have a certain layout in the upstream.

    Asian Metal: As an industry insider who has been in the business for many years, how do you see the price spike during August and September 2021 and its possible impact in the future?

    Mr Wang: This round of price spikes is due to the short-term release of demand and tight production capacity, the frequent issuance of power restrictions by local governments in many regions, causing panic on the demand side, which turned into a short-term supply situation, prices rose from the level of RMB13,000/t to RMB60,000/t. After this price spike, all parts of the supply chain for the profit expectations has changed, we are no longer willing to accept the previous narrow margin, which is good for the long-term development of the market, at the same time, the negative impact is the problem of compliance, which will allow suppliers of good faith to gain reputation, while those who fail to trust gradually abandoned by the market. After this price spike, the trust between buyers and sellers was greatly tested, and many manufacturers refused to perform through various excuses after the price increase. However, the relationship between us and a number of fixed suppliers has stood the test, through the huge fluctuation, completed all of the contracts with quality guaranteed, reaching a cultural interchange with each other and a mutually beneficial and win-win situation. Therefore, after this, the trust relationship between us will be stronger and closer, while we will be more cautious with other suppliers.

    Asian Metal: The domestic energy policy has led to a steep increase in demand for polysilicon, while the raw material silicon metal prices skyrocketed, resulting in an unprecedented market for polysilicon. What impacts do you think will silicon powder suppliers face?

    Mr Wang: The polysilicon market has a huge boost to its profit growth, while at the same time, the tight supply of silicon metal has caused a significant increase in the cost of silicon powder producers, and price increases have become inevitable. It is predicted that the annual consumption of silicon metal in the next ten years will reach 4 million tons, much larger than the current consumption of more than 2 million tons, most of the growth is contributed by the polysilicon industry. The proportion of polysilicon to total silicon metal will grow from 30% to about 50%, exceeding the silicon metal consumption of silicone. This is good news for us.

    Asian Metal: The surge in the price of silicon metal requires more capital investment for the silicon powder plant, but also expands the profit margin of the silicon powder plant, do you think this situation is sustainable and how will it evolve afterwards?

    Mr Wang: The price spike is due to a variety of factors and its own sustainability is weak, as illustrated by the fact that prices have weakened all the way from the beginning of October. The market supply and demand will automatically regulate the direction of prices. The sustainability will be weaker if the profit is more than 20%. However, I think it is helpful for silicon powder manufacturers to maintain a reasonable profit. If the gross profit is below 10%, it will be very difficult for companies to carry on, and our positivity to manufacture will take a huge hit. Therefore, we believe that gross profit should stay at around 15%. If we can't make a reasonable profit, with the advantages of our current plant, warehouse and location, we can even turn into a logistics center.

    Asian Metal: With narrow profits and large investment, silicon powder exporters have faced huge challenges in the past few years. Do you think this phenomenon has changed? If so, what do you think the situation will be in the next 2-3 years?

    Mr Wang: We have been in the spirit of supplying high-quality, valuable services to cooperate with customers, however, in the pursuit of many latecomers, profits have continued to shrink in recent years, after the price spike in August and September this year, many suppliers' ability to perform has been questioned, because I think foreign customers should rethink and adjust procurement mindset and systems, only a multi-win situation can be more durable and stable. From our own point of view, we still need to make more efforts in cost with the support of policy. Therefore, I think the competitors in this field will be more healthy competition, while suppliers and buyers will reach closer and deeper cooperation.

    Asian Metal: How do you forecast the prices of silicon metal in Q1 of 2022?

    Mr Wang: Based on the current production cost of silicon metal, the price is basically at a low level now. The DMC prices increased from RMB22,000-23,000/t to RMB26,000-27,000/t this month, which has given some support for the stabilization of the market. I think the price of silicon metal is generally on a stable trend in Q1, and a range of 10% up or down is a relatively normal situation.

    Asian Metal: What special advantages does your company have for silicon powder production?

    Mr Wang: Wallpark carried out the production of silica powder very early, is a high-tech enterprise in Wuhan, we have a relatively strong technical team, whose number accounts for more than 60% of all employees, in terms of technology and equipment, we have a number of self-own R&D and patents. In addition, in the policy for green production more and more emphasis on the situation, Wallpark has been increasing continuous investment over the plant and production of green transformation, to ensure no dust in the entire workshop, which is a sustainable measure for employees and customers. We have already invested tens millions on environmental improvements.

    Asian Metal: Does your company have any development plan for the next few years?

    Mr Wang: In the next few years, we will continue to maintain and strengthen the cooperation with our fixed foreign customers, and also try to develop some domestic customers to reach a mutually beneficial and win-win cooperation.

    Asian Metal: Thank you very much for the interview and wish your company the best.

    Mr Wang: We thank Asian Metal for this opportunity and look forward to more cooperation and opportunities in the future.
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