Chinese magnesite industry to gradually get back on track in H2 2020

Asian Metal: Hello, Mr. Ma! Please make a brief introduction to your company firstly.

Mr. Ma: Yingkou Kaining Industry Co., Ltd. under Shenghai Group was founded in May 2015 in Dashiqiao, Liaoning, which is called the capital of magnesite in China. As a modern company focusing on the production and sales of refractory, Kaining Industry mainly produces magnesite powder, caustic calcined magnesia powder, high-purity magnesia, ordinary magnesia, magnesia (dicalcium), macrocrystalline magnesia, magnesia carbon brick and others. Owning three magnesite mines, four flotation production lines, four suspension kilns and 24 furnaces for magnesia production, it has formed a complete industrial chain from raw materials to final products. The company has introduced high-tech producing equipment and established modern corporate management mechanisms since its establishment. Adhering to the concept of "scientific management, quality service and development", it has carefully built itself into a high-tech and high-quality producing company.

Asian Metal: Would you please share with us the magnesia price trend since early 2019 and reason for it?

Mr. Ma: Magnesia prices have shown a downward trend in Liaoning since early 2019. On the one hand, in view of the sharp price increase starting from 2017, magnesia producers started expanding production in order to make more profits, leading to overcapacity and more stocks of the material. On the other hand, owing to soft demand from downstream customers, it's hard for sellers to conclude deals and transactions in the market were limited.

Asian Metal: What are the major problems in the current magnesite market?

Mr. Ma: In addition to problems of oversupply and soft demand which have already existed, the magnesite industry has been witnessing the problems caused by the outbreak of Covid-19 worldwide since late 2019. All countries are trying their best to fight against Coivd-19 and some companies can't resume production, leading to obvious slowdown in the development of global economy and even economic stagnation in some countries. It's impossible for China's magnesite industry to avoid the influence of Covid-19, especially for the export business.

Asian Metal: How about the demand of magnesia in major consuming countries against the backdrop of the spread of Covid-19 worldwide?

Mr. Ma: Affected by the rapid spread of Covid-19 in the world, the global economic development has been damaged and rapidly entered a recession period. China's magnesia products are mainly exported to Europe, North America, Japan, South Korea and Middle East where the Covid-19 pandemic is very serious and the demand shrinks sharply.

Asian Metal: What about the operating rate, spot supply of magnesite industry and environmental protection policy in Liaoning currently?

Mr. Ma: With the spread of Covid-19 effectively contained in China in February 2020, the production and supply of magnesite industry in Liaoning has basically recovered so far. As the central government has paid more and more attention on environmental protection in the recent years, the government of Liaoning has constantly improved its requirements on environmental protection and is gradually making these requirements normalized. In addition, the government of Liaoning is boosting the integration of magnesite industry. As the magnesite industry is one of the pillar industries of Liaoning, the local government and companies will work together to promote the development of the industry, and at the same time, the concept of environmental protection will be pursued throughout the development of the industry.

Asian Metal: What do you think of the price trend of magnesite in the second half of 2020 against the backdrop of current supply and demand in the market.

Mr. Ma: The spread of Covid-19 continues in overseas countries, but has basically been curbed in China. Meanwhile, the domestic market is gradually recovering. Thus, we expect that the magnesite industry in China would gradually return to normal in the second half of 2020.

Asian Metal: How should producers deal with the impact brought by the Covid-19 pandemic?

Mr. Ma: Owing to the quarantine and delay of the resumption of work and production caused by the Covid-19 pandemic, we producers bear great pressure of insufficient workers, soft demand and less trade volume now. We should make scientific and effective production plans, arrange production based on demand, conduct accurate management policies, improve our service and promote the digital transformation of ourselves.

Asian Metal: What are your prospects for your company's development in the next five years?

Mr. Ma: We will continue to formulate development routes suitable to modern producers and gradually make effective mechanisms for production, operation and management. Meanwhile, we will strive to increase income, cut expenditure, improve process technology and production efficiency, shorten production cycle, enhance product quality and provide customers with quality products and services so as to break new ground.

Asian Metal: Thank you for your excellent analysis. Wish your company a better future!

Mr. Ma: Thank you and also wish your company a brighter future!