Promising outlook for tellurium market

Asian Metal: Thank you for accepting the interview with Asian Metal. Would you please give us a brief introduction to your company?

Mr. Li: Located in Chengdu High-tech District of China (Sichuan) Pilot Free Trade Zone, Ffu Technology is engaged in the R&D, production and sales of semiconductor materials, optoelectronic materials, special alloy, and new functional materials made out of high-purity rare metals like tellurium, bismuth, indium, selenium, gallium, bismuth, antimony and their oxides, compound, alloy and targets, etc. These products are widely used in solar photovoltaic, LED, infrared detection, electronic communication, aerospace, pharmaceuticals industry, etc. In addition, we also provide closed-loop recycling services of rare metal resources, and customize products as well as provide application solution and recycling solution for our clients, aiming to become an leading advanced rate metal materials enterprise.

Asian Metal: Tellurium is widely used in many different fields. What are the main tellurium products of your company? And what are the main application areas?

Mr. Li: We mainly produce four types of tellurium product, namely high-purity metal, oxide, compound/alloy and target materials. High-purity metals include tellurium metal 99.99%min (ingot, pellet and powder) and tellurium metal 99.999-99.99999%min; high-purity oxides include tellurium dioxide 99.99-99.9999%min; high-purity compounds/alloys include bismuth telluride, cadmium telluride, Te-Cu alloy, Te-Bi alloy and so on; high-purity target materials include bismuth telluride, cadmium telluride, etc.

Our Te-series products are mainly used in semiconductor electronics, solar cell, fine chemicals, metallurgy and casting, infrared detection and other areas.

Asian Metal: Tellurium metal price increased by a large amount in H1 2018 and reached up to RMB600/kg (USD86.67/kg). Despite starting to drop from June, the current tellurium price is still above the overall price level of 2017. What do you think are the causes of higher prices? What's your view on the price trend in the future?

Mr. Li: The decrease in supply of raw material and stronger demand at home and abroad mainly led to the fast-rising tellurium price in early 2018.

In Chinese market, the production of tellurium-contained materials (copper anode slime, alkali tellurium slag, etc) decreased as a result of stricter environmental inspection. At the same time, the shrinking supply in the market gradually drove price up. This means higher production costs for tellurium raw materials. Prices for materials with tellurium content at around 40% were about RMB200,000/t (USD28,879/t) in early 2018 and exceeded RMB400,000/t (USD57,758/t) in April, with an increase of 100%.

As the government carried out stricter inspections, some small-sized tellurium smelting enterprises cut or halted production. As a result, China's tellurium metal output declined by about 25% YOY in 2017 (China's total tellurium output was less than 300t, so the 25% decline amounts to about 75t), and the excessive inventory in the market was fast consumed.

In light of China's promotion of Building Integrated Photovoltaics (BIPV) and the official start of production of cadmium telluride solar cell in Chinese market, the consumption of telluride from cadmium telluride solar cell industry is expected to reach 200 tonnes per annum based on current estimation. This made market participants become more optimistic about the cadmium telluride solar cell industry as well as the demand and price trend for tellurium in the future.

In international market, some manufacturers represented by First Solar who cut production and reduced inventory a few years ago have now resumed normal production and started regular purchase cycle, with their purchase volume of tellurium increasing by more than 100 tonnes.

In the future, the inherent scarcity of raw materials and China's high requirements of environmental protection for the metallurgical and chemical industries will further drive up production costs and restrict the total output of tellurium metal; the fast development of cadmium telluride solar cell in China and the steadily rising demand from traditional industries will also spark a surge in demand for tellurium in China. The situation of oversupply will be completely reversed in the future, which is expected to further drive up sales price for tellurium metal.

Asian Metal: There are many sources of raw material for tellurium, including some intermediates produced from the copper smelting process. What services and contributions can you provide to the society in terms of metal recycling?

Mr. Li: We already cooperated with some copper and lead smelters for the comprehensive recovery of tellurium-containing materials produced from main smelting process. In addition, we also recycle leftover scraps produced by downstream customers using our tellurium series products, as well as expired tellurium-based devices.

Ffu Technology adheres to the concept of comprehensive development, cleaner production, and cyclic utilization. We adopt a combination of physical and chemical techniques for the recycling and reprocessing of various kinds of tellurium-containing materials and devices, setting up a complete recycling industrial chain.

Our environmentally friendly metal-recycling process reduces the wastage of valuable rare metal resources and turns waste into treasure. Our products are mainly used in the field of new materials and new energy, which help to create a better life for human beings.

Asian Metal: China carried out a series of strict and large-scale environmental inspection and rectification in 2018, and a few companies failing to meet standards were forced to restrict or halt production. What's your opinion on the supply of tellurium metal in China currently?

Mr. Li: The supply pattern of tellurium metal in China has undergone major changes over the past few years. During 2012-2016, tellurium price dropped sharply from as high as RMB3,000/kg (USD432/t) to lower than RMB200/kg (USD28.83/kg) as a result of global economic crisis. Some traditional tellurium producers went bankrupt or changed business, completely stepping out of the field.

Over recent two to three years, the government has been setting higher requirements of environmental protection and increased penalties for those who break the laws. Some enterprises that failed to meet environmental protection standards were forced to shut down.

At the same time, China has been promoting supply-side reform with the production of tellurium metal 99.99%min reducing year by year, so the previously stored inventory was being consumed continuously. Up to now, China has basically achieved the supply-demand balance of tellurium and the supply might be a bit tight in 2019.

Asian Metal: What's your view on the application and development of tellurium metal in the future?

Mr. Li: I am very optimistic about the future application and development prospects of tellurium metal. Major application areas include traditional chemical and metallurgical industry, semiconductor electronics industry, solar cell industry and computer chip industry.

Asian Metal: Continuous innovation can enhance the competitiveness of products. What does your company invest in the R&D of products? And what's your advantage?

Mr. Li: We've established good cooperative relations with many research institutes (such as China Academy Of Engineering Physics, Emei Semiconductor Materials Research Institute, College of Materials Science and Engineering of Sichuan University) for jointly carrying out R&D projects and sharing scientific research results. In addition, we regularly conduct technical discussions on products with our customers for the purpose of continuously improving product quality and enhancing user experience.

We customize production lines and products for our customers and synchronize production of with upstream and downstream production with the help of data-transmission control. All of our products are specially customized for clients.

We focus on the accumulation, statistics and analysis of data. We store complete production data and performance track record and give product quality improvement suggestion for each single product delivered to our customers. With the help of these data, we can set a clearer path for the R&D of new products or get better technical improvement solutions.

Innovation is the eternal pursuit of Ffu Technology. We aspire to the ever-improving product quality and are committed to the continuous exploration of product applications.

Asian Metal: What is your development plan and market positioning for the future?

Mr. Li: We mainly focus on the development of tellurium series products at present. Relying on our own technology, we've already finished the construction of production lines for tellurium metal 99.99%min, high-purity tellurium metal 99.999-99.99999%min and high-grade tellurium dioxide. In addition, we are also building the production lines for tellurium-based compound, and preparing to build production lines of tellurium-based target materials. The production line of tellurium-based device is also expected to go into operation in 3-5 years. After completing the layout of tellurium industrial chain, we would commence the in-depth research, study and development of other rare metals including indium, gallium, selenium, bismuth, antimony germanium, etc. We will continue to dedicate to the development of high-purity rare metal materials.