Chinese graphite producers to face green tax in 2018

Asian Metal：Miss Wan, thank you for accepting our interview. Could you please introduce your company's basic information?

Miss Wan: Our company, a comprehensive production enterprise of high carbon graphite, medium carbon graphite, micro powder graphite and graphite products, was set up in 1999 with the structural reform of Yuanzhen Graphite Plant, and has 50 million tons of explored graphite reserves and a capacity of 50,000tpy. We have more than 200 employees and 20 research staffs and our products are sold to over 300 companies in 28 provinces and cities in China and more than ten countries and regions like Japan, South Korea, Europe and USA.

Asian Metal：What are the advantages of Shandong-based graphite producers compared with those in Heilongjiang?

Miss Wan: Most graphite producers in Shandong conducted graphite mining from 1980s, so they own mature techniques and a variety of graphite products. However, those in Heilongjiang performed mining later with higher transport costs and simpler techniques.

Asian Metal：Chinese graphite flake prices moved up significantly in 2017. Could you please explain the reasons briefly?

Miss Wan: Environmental protection regulations became stricter in China in 2017, and most producers in Shandong were out of production for more than one month, leading to scarce supply. Downstream clients felt panic and increased their purchasing volume. Therefore, graphite companies in Northeast China mostly arranged orders till 2018 and largely sold out their stocks. Transaction prices for graphite flake increased sharply supported by temporary tight supply.

Asian Metal：Chinese graphite flake market saw relatively sparse deals in Q1 2018. Please describe the reasons briefly.

Miss Wan: Most companies from downstream market held sufficient stocks resulted from rising prices in 2017, so clients' demand for graphite flake was not strong in early 2018. Moreover, current prices are relatively high and producers in Northeast China gradually resume production as the weather is getting warmer, leading to increasing supply. Downstream market participants take a wait-and-see attitude.

Asian Metal：Environmental inspections were strict in 2017, so what changes do you think will occur in environmental inspections in China in 2018 and what's the influence on graphite industry?

Miss Wan: The focus of environmental inspections will shift from eliminating unqualified companies to regulating legal enterprises step by step in 2018, and the coal-to-gas policy will be fully implemented. Green tax is listed into the land tax. Therefore, graphite companies' costs will increase further.

Asian Metal：Related national departments take strict measures to control mineral resources in China, and the market of magnesia, a refractory raw material, witnessed great changes due to mining restriction of magnesite. So in your opinion, whether related departments will control graphite ore mining or not in the future and what kind of impact will have on the market?

Miss Wan: Our government took charge of mineral resources earlier in Northeast China to control annual mining volume. Ore mining is also hard in Shandong because of strict environmental inspections. At present, market players pay more attention to overseas graphite mines and some graphite ores have been imported by Chinese buyers, which will affect Chinese graphite ore.

Asian Metal：What kind of influence will have on graphite market as the green tax is carried out formally in 2018?

Miss Wan: Production costs will inevitably increase. In addition, costs also supported soaring prices in 2017. Thus graphite prices will not fall back sharply temporarily.

Asian Metal: Please introduce your company's future development plan in brief.

Miss Wan: The graphite environmental protection park is under development in Qingdao, so we plan to upgrade techniques and cooperate with universities' scientific research labs to develop towards a high-end company relying on resource advantages.