Opportunities coexist with challenges in Q4 antimony trioxide market

Asian Metal: Thank you for accepting our interview! Please make a brief introduction to your company firstly.

Ms. Zhao: GMG, the originally largest state-owned import and export company of mineral products in Guizhou founded in 1950s, has been one of 11 companies owning antimony products export permit acknowledged by the Ministry of Commerce of China. After the privatization in 2009 and the restructuring in 2012, GMG is now a subsidiary of Dongfeng Antimony under Shenzhen Jiefu Corporation and an export platform of antimony ingot, antimony trioxide, flame retardant masterbatch and other products with the brand of Jiefu. Shenzhen Jiefu Corporation, including GMG and Dongguan Jiefu, has annual sales of nearly 12,000t and is one of top five companies in the domestic antimony industry.

Asian Metal: As we all know, China's antimony trioxide export market has seen weakened demand so far this year affected by the spread of Covid-19 in overseas countries. Has the Covid-19 brought some bad influences on your company so far in 2020?

Ms. Zhao: Chinese antimony companies have been influenced by the Covid-19 pandemic and the Sino-US trade war to different degrees so far in 2020 and our company is not an exception. It seemed that the impact was mainly felt in Q2 when our antimony trioxide exports dropped by 10% YOY; but in Q3, our exports of the material went up by 10% YOY as the spread of Covid-19 was contained to some extent and the demand for our antimony trioxide from our customers, most of whom are end users from Japan, South Korea, Germany and Belgium, was relatively stable. The overall sales this year are expected to be largely in line with those of last year.

Asian Metal: The demand for antimony trioxide declined generally in China's export market in Q2 and Q3, but export prices increased slightly in Q3. What's the reason for the price increase in your opinion?

Ms. Zhao: As far as we are concerned, there were three major reasons for the price increase of antimony trioxide in China's export market in Q3. Firstly, any price fluctuation couldn't be separated from the market law, namely the supply-demand relationship. Specifically speaking, we mainly attributed the price increase in Q3 to tight supply in China's export market. Although the demand for Chinese antimony trioxide in the export market was weak as overseas customers just refilled stocks cautiously and were not confident enough to make replenishments affected by the spread of Covid-19 pandemic, the supply of the material in the export market was tight owing to the supply shortage of raw material antimony concentrate, especially against the backdrop that China's imports of antimony concentrate from Russia, Burma, Tajikistan and other countries dropped by nearly 40%. Secondly, in spite of increasing mining costs and environmental protection costs year by year, prices of antimony trioxide were lower than those of antimony ore and antimony trioxide producers, who suffered losses, were unwilling to conclude deals, which also stimulated prices to rebound. Thirdly, with the demand for antimony trioxide from Southeast Asian customers starting reviving in early June 2020 and that from Chinese customers picking up gradually then, our exports of the material went up substantially by 30% MOM during the month and prices began increasing.

Asian Metal: Will the demand in China's antimony trioxide export market increase in Q4?

Ms. Zhao: We think the worst period of 2020 has passed already. We saw signs of improvement in China's antimony trioxide export market in Q3 when our exports increased noticeably MOM, and we expect that our exports before year-end would exceed those in the corresponding period of 2019. As market players become increasingly confident and overseas customers are more willing to hold extra stocks at the moment, we predict that some favorable changes would be seen in China's export market in Q4.

Asian Metal: Prices of antimony ingot and antimony trioxide generally rose in the domestic market in Q3. Will this situation continue in Q4?

Ms. Zhao: We think that prices of antimony ingot and antimony trioxide would continue going up in China in Q4. One reason is that Chinese producers of the two kinds of products keep low operating rates now owing to tight supply of raw material caused by difficulties in importing antimony ore affected by the resurgence of Covid-19 pandemic in overseas countries. The other reason is that the demand for antimony ingot and antimony trioxide has shown signs of recovery both at home and abroad.

Asian Metal: China's antimony concentrate imports have declined by about 37% so far this year based on the statistics of China Customs, so Chinese companies have to face challenges of the supply shortage of raw material. Do you think the supply shortage of antimony concentrate will be eased in the Q4?

Ms. Zhao: The spread of Covid-19 pandemic has been controlled effectively in China, but that in other countries and regions, especially in Europe, America and nearby countries of China, remains serious and isn't expected to be contained effectively before the end of 2020. China's imports of antimony concentrate have increased slightly QoQ so far in Q4 2020, but aren't expected to cause obvious changes to prices of antimony products in the market as Chinese importers just import antimony concentrate in small volumes in batches at present.

Asian Metal: China's antimony trioxide market has witnessed fierce competition so far in 2020. Please share with us your ways to win the competition and your advantages in this industry?

Ms. Zhao: Responding to the unfavorable factors caused by the spread of Covid-19 pandemic, we have increased our advertising investment, expanded corporate publicity, actively expanded international customers through various channels, improved after-sales service so far in 2020, leading to stable exports on year-on-year basis. We think that one major advantage of us in antimony trioxide industry is that we own complete antimony industry chain. First, we can get sufficient supply of raw material as we have our own mine and have established cooperation with more than two mining companies in China. Second, with a complete antimony industry chain, we can produce a wide range of antimony products, such as primary-processing products including antimony sulfide, antimony ingot and antimony trioxide and deep-processing products including flame retardant masterbatch, so we can meet different requirements of different customers. It's worthy to be mentioned that we have got patents for the production of flame retardant masterbatch, which has a high potential to be widely used in the future market due to the environmental-friendly characteristics, and we mainly produce PE90, PP90, PA80, PBT80 and other specifications of flame retardant masterbatch at the moment. Third, we own export permit, sufficient funds and a loyal customer base (most of our customers are end users both at home and abroad), and can offer efficient service, which are also major advantages that support us to get rid of influences of the Covid-19 pandemic and realize the recovery of our sales.

Asian Metal: Will you adjust your plan on production technology and output of antimony trioxide in the second half of 2020 and what's your development plan or target in the future?

Ms. Zhao: We now have an annual production capacity of 20,000t of antimony trioxide, which can meet the current demand. We will optimize our dust collection and packaging systems in the future. We mainly plan to upgrade our production and R&D equipment of flame retardant masterbatch, add new production lines and build a library related to flame retardant masterbatch. We hope that our sales of flame retardant masterbatch and antimony products would reach 3,000tpy and 15,000tpy in the next five years respectively.

Asian Metal: Thank you again for accepting our interview! Wish your company a better future!