Asian Metal：Although the US economic data has at times been weak, the Fed did not change its monetary policy. However, the Fed's attitude has become tougher recently. When do you think the Fed is likely to increase interest rates?

Cheng: Recently, people have paid less attention to the Fed’s attitude towards interest rates. Global monetary policy appears to be the differentiating trend. The latest US economic data and employment data are relatively strong, so the United States as a nation is continuing to shrink its monetary policy. According to the model that Fed Chairman Janet Yellen proposed in 2013, the Fed should already have had the chance to increase interest rates by the end of 2014. In the minutes of its meetings the Fed also continually mentioned that the US economic recovery is optimistic and the strong dollar has had little negative effect on its economic growth. Fed officials have said it may raise interest rates in mid-2015. At present the main obstacle to the US Federal Reserve interest rate hike is inflation, but inflation there has not reached 2%. In addition, the recent slump in crude oil prices may reduce US inflation. However, I think the decline in crude oil prices may also be of some benefit to the US economic recovery. The Fed is concerned with core inflation-based energy costs.

I think during the first quarter of 2015, the US Fed may increase interest rates. The interest rate increase will make international market capital return to the US, reducing some of its pressure from tightening monetary policy.

Asian Metal: The central banks of China, Japan and Europe have issued some stimulus packages recently. What impact do you think the policies will have on the nonferrous metal market?

Cheng: Interest rates have been negative in Europe, so it has no more easing policies available, except the purchase of ABS. Japan is in the same situation now. I think the influence of easing policy on the real economy is weakening now and most funds still stay in the financial system rather than the real economy. If the funds flow into the real economy, the demand for metals may increase sharply. However, if the funds were in the internal circulation of the financial system, it would only push up the prices of financial assets. This basically accords with the present reaction of the economy in these countries, which have issued monetary policies.

Asian Metal: Do you think China will continue to issue further stimulus policies to kickstart the gloomy economy?

Cheng：I think few unexpected policies will be carried out in China in the near term. If China restarts large-scale investment, the bubble of the Chinese economy will continue to grow. However, the bubble may burst later on. The expected policies are likely to relate to land transfer, urbanization and the reformation dividend.

Asian Metal: What factors do you think will have an impact on the silver market trend?

Cheng: We cannot only consider silver as a kind of commodity, as it has strong financial properties, just like gold. I think current silver prices have not reached the bottom. Supply of silver differs from other metals. Silver supply is principally from copper and lead smelters, recycled silver and sell-offs by some financial institutions. Silver’s financial property is weaker than gold. I think that the major factor affecting the silver price is the silver investment demand rather than silver consumption.

Asian Metal: As prices for silver were continually hiked during the past few years, its financial aspects were more prominent back then. However, with silver ingot prices having slumped significantly, do you think the financial properties of silver will weaken and its role as a commodity will become more important?

Cheng: I think so. As when the price of a commodity has moved far away from its value, its supply, consumption and production costs will not influence the price.

Asian Metal: It’s reported that with silver prices at USD18.50/oz, revenue and expenditure were balanced in seven out of 12 major silver mining companies globally during the third quarter of 2014. The production cost at the seven mining companies was relatively low. The current silver prices are well below USD18.50/oz. We also learnt that the operating situation in some silver mines in China was also very bad during 2014. Do you think the production costs of silver mining will support silver prices?

Cheng：I think the production costs for silver may offer less support to silver prices, especially in the Chinese market. There are few independent silver deposits in the world and the majority of silver resources are accompanied by lead, zinc, copper, gold or other metals. Meanwhile, the content of silver is much lower than that of other metals, so silver output or production costs are not usually scheduled by mining companies.

Asian Metal: China’s silver wire export trading was very active during the first half of 2014, leading to a sharp decline in silver ingot supply on the Chinese spot market and an increase in silver premiums. However, the export of silver wires declined dramatically in late 2014. What are your thoughts about current supply and demand for silver ingots on the Chinese market?

Cheng: I had been aware of the significant increase in silver exports during 2014 and presumed there would be a rise in silver. However, the current silver supply has exceeded demand once again on the Chinese market.

Asian Metal: Now the Shanghai Free Trade Zone’s bulk spot trading rules have been introduced, what impact do you think they will have on the Chinese silver market?

Cheng: Silver is an international commodity. The establishment of Shanghai Free Trade Zone (FTA) will link up the Chinese and overseas silver markets more closely and narrow the price gap. Trading in silver ingots may become more active in the future, as it will be more convenient for account exchange and foreign current exchange in the Shanghai Free Trade Zone. However, I think FTA may have less of an influence on the Chinese physical silver market than on silver derivatives, as the physical trading will be impacted by logistics, warehousing and so on.

Asian Metal: Silver prices continued to head down during 2014. What are your thoughts on the silver market outlook for 2015?

Cheng: I am relatively pessimistic in my predictions for the silver market in 2015. Silver prices will be influenced by the US dollar’s liquidity and interest rates. The US may tighten its monetary policy in 2015, weighing the silver market down.