Tin prices to rise on tighter supply and higher production costs

Asian Metal: Mr. Zhang, thank you for taking time to accept this interview. Firstly, please give a brief introduction of your company.

Mr. Zhang: Our company focuses on the business of tin concentrate mainly imported from Wa State of Myanmar. In China, we mainly sell tin concentrate and process tin ingot. In 2018, our average monthly purchase volume of tin concentrate reaches 2,000 metal tons and the total trading volume of the material from January to June was 11,000 metal tons.

Asian Metal: We learnt that Gejiu Qiandao developed at an amazing speed in the past two years. Could you please specify your way of being strong and advantages compared with peer companies?

Mr. Zhang: The fast development of our company results from united employees, incentive plan and quality service. As long as we do a good job in every aspect, we could realize the goal of all-win, which is the key of our rapid expansion.

I. Adhering to the management idea of being equal, we positively encourage employees to develop business and improve professional abilities by offering huge rewards in order to realize the goal of win-win. With platform and support from the company, employees consider work as personal business and work with great enthusiasm.

II. In order to achieve win-win cooperation, we provide various ways of cooperation for customers. For instance, we could accept different terms for settlement and delivery while purchasing tin concentrate. We also adopt the same policy in supply of tin concentrate, for which we receive recognition and trust from more customers. Besides, we give operation and risk control guidance to customers based on our understanding on the market to bear the risks brought by market fluctuations with them together.

It's hard to move forward in the current business environment with previous ideas. We could have more chances only by win-win cooperation and keep getting stronger.

Asian Metal: You focus on the idea of win-win cooperation. Could you please introduce some of your customers?

Mr. Zhang: We mainly do business in Wa State of Myanmar at present. In 2018, our average monthly purchase volume of tin concentrate reaches 1,500-1,700 metal tons. From May on, we began to purchase tin concentrate in Ruili port, in which tin concentrates from Dawei, Loikaw and Mandalay of Myanmar are traded. Currently, we purchase 150 metal tons per month here. In addition, we also do some business of tin raw material in Guangxi and Yunnan, including Gejiu and Tengchong. Our monthly trading volume is 300-500 metal tons in Chinese market.

In China, we focus on reprocessing of tin concentrate, trading of tin concentrate and OEM of tin ingot. We have seven or eight regular customers now, which mainly locate in Yunnan and other tin production areas outside the province.

Asian Metal: Your company is on track now, and could you let us know your plan for the next three years?

Mr. Zhang: Our goal is to march forward a small step each year and make a great achievement every three years. This year we focus on Wa State and will move to the southern and central areas of Myanmar in the next year. In future, we will try to be the most popular supplier in tin raw material market in order to provide various quality services for all partners and make all kinds of solutions for customers.

Asian Metal: We hope you could realize your plan smoothly. We learnt that supply of tin concentrate got tighter in Chinese market from last year, especially high-grade tin concentrate, and the TC is quite close to the production cost of smelters now. Could you tell us why?

Mr. Zhang: Smelters suffer great sales pressure, so do mining companies. With tin prices standing at around RMB145,000/t (USD21,021/t), many dressing plants suspend production as tin ore with grade of around 1% from Wa State has almost no profit margin. Lower grade of tin ore leads to higher production cost. As far as we know, the monthly output of tin concentrate in Wa State is no more than 3,500 metal tons this year and the figure will decrease to less than 3,000 metal tons next year. Smelters charge less TC due to decreasing supply of tin ore and also suffer higher production cost for new environmental equipment and operation cost.

Asian Metal: What do you think about tin market outlook in the next three years?

Mr. Zhang: As I just mentioned, mines and smelters suffer increasing production cost with decreasing tin ore. To date, neither Myanmar nor China has found large-scaled tin reserves, so tin resources are limited in the coming years. According to changes of tin ingot consumption in the past years, we see a stable trend with weak periodicity. I'm optimistic about market outlook with tighter supply, increasing upstream production cost and stable downstream consumption.

Asian Metal: Anything else you want to share with us?

Mr. Zhang: I want to talk about the tin scrap industry. Actually it's of a huge scale with an annual volume of 30,000 metal tons based on conservative estimate. Compared with tin concentrate industry, it receives less attention. However, it also makes significant impacts on tin prices. As China strengthened environmental inspections from 2016, the tin scrap industry was affected to a large extent, so costs of scrap increased gradually.

Asian Metal: Thanks for your wonderful comments. Wish your company a brighter future!

Mr. Zhang: Thank you.