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Asian Metal: Thank you for accepting Asian Metal’s interview. Would you please introduce your company?

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Xie: Zhuzhou Dingli Industrial Co., Ltd. is located in Zhuzhou, Hunan, a city famous for its developed non-ferrous metal business. Our company has developed into an entity enterprise which focuses in production and development as well as research of cobalt powder with a monthly output of 40 tons and 180 tons for cobalt powder and cobalt carbonate respectively, occupying an area of over 8,000m2, since 1991 when the company started as a trading company.

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Asian Metal: We know that Dingli was founded in 1991 as a trading company. Why does the company be transformed into an entity plant?

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Xie: Chinese economy has shown a prosperous and repaid development since 1991, we believe that the company will have more space in developing entity economy.

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Asian Metal: We’ve known that major cobalt powder companies in China are Bailuoda, GEM, Hanrui, Jinchuan, and Dingli etc.. Would you please introduce the changes of Zhuzhou cobalt powder market over recent years?

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Xie: Generally speaking, there are two types of cobalt powder consumers: Ones are price sensitive buyers, less requiring on quality, and others care about the quality of the powder with little concern on price. At first, there were more low-end products in cemented carbide market, but most participants have attached much importance to quality with accumulated fund as investments on high-end workshop, equipment and physical infrastructure keep growing. Most of our clients are more caring about quality and basically from anvil, bar, and high-end cutting tools industries. Currently, we can produce 50 tons of cobalt powder per month at most, and the annual production value reached RMB140 million in 2011.

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At first, some cemented carbide producers in Zhuzhou bought cobalt oxalate to produce cobalt powder by themselves and continued to process cobalt powder into cemented carbide. However, most cemented carbide producers have started to place bulk orders of the cobalt powder in order to control production cost in recent years. For now, GEM owns the largest market share in Zhuzhou cobalt powder market, and other suppliers are agents or producers who sell 1-2 tons per month.

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We are superior in controlling production cost while insisting on high quality. High quality, low price and quick cash circuit are our sales ideas. We mainly sell and purchase on a back-to-back basis. In addition, our management cost is relatively lower.

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Asian Metal: Data show that Chinese cemented carbide output reached 13,000 tons in H1, 2011, up by 19.5% year-on-year. However, the output of H2 was less than that in the same period of the previous year, especially worse in Q4, owing to the sluggish global economy and so on. The output of cemented carbide was 23,000 tons throughout 2011, and the market shows no improvement this year as many producers of cemented carbide reported a 40-50% down in sales in the past several months compared with the same period of 2011. Could you make a comment on the cemented carbide market?

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Xie: Zhuzhou’s cemented carbide producers had developed well with steady growth before 2011. Although the price of cobalt metal kept a zigzag downtrend, the consumption of cobalt powder steadily increased.

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Entering into H2, 2011, the cemented carbide market started to show some weaknesses in August, and producers experienced sharp decrease of orders after September because of worsening international economy, European debt crisis and slower growth of Chinese economy. Besides, as the price of tungsten carbide powder kept high, causing an increasing cost of cemented carbide, many cemented carbide producers used recycled tungsten carbide powder and molten zinc alternatively to decrease production cost, and the consumption of cobalt powder significantly shrank consequently.

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Asian Metal: Cobalt powder price has shown a downtrend since 2009. Could you share your opinions on the future market of the powder?

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Xie: As for the positive side, we believe that strong demand for cobalt will be seen from battery material and super alloy industries. Considering delayed new cobalt mine projects, stock liquidation of producers, and unexpected increasing price of cobalt, we think the supply of raw material will not be as sufficient as estimated.

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As for the negative side, cobalt market is buyer’s market. With soft Chinese market and gloomy global economy, we believe that the price of cobalt will hover at a low level in the remainder of this year as participants lose confidence in macro economy.

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Asian Metal: Please talk about your views on the current cemented carbide market.

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Xie: Chinese economy has tightly connected with international economy, and cemented carbide market is unlikely to improve significantly if the global economy sees no improvement and Chinese economic growth slows down. I do not think that the market will experience major improvement within this year, and what we need to do at present is enhancing the quality of product to make us more competitive in the future.

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Asian Metal: I was told that a new cobalt powder production base will be set up by your company. Could you disclose the progress of the project and the future plan of your company?

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Xie: The current company’s production site and capacity cannot meet the need of expanding business this year, so we are procuring land for new workshop which is estimated to go into production in early 2013 with a designed capacity of 2,000tpy, and its production capacity will reach 1,000tpy in Phase I.

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Asian Metal: Thank you again. We all look forward to further updates and best of luck.

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Xie: Thank you.

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