Yu Hong: DPRK iron ore market sees great development potential

Asian Metal: Ms. Yu, thank you for accepting the interview with Asian Metal. Could you briefly introduce the business of your company?

Yu: Shenyang Yidayuanhang Co., Ltd is a comprehensive international trading company with independent import and export operation rights approved and put on record by the National Department of Commerce, Customs Bureau and the State Administration of Inspection and Quarantine. We cooperate with DPRK to import and export various products including iron ore, phlogopite, cloths and chemical products.

Asian Metal: Could you introduce the outline of company development in 2013?

Yu: The company will be engaged in iron ore import and export and we are negotiating with a new client in DPRK who plans to import 20,000-30,000t of iron ore. Besides, we hope to build cooperative relationships with more domestic steel mills to become the largest supplier of iron ore from DPRK.

Asian Metal: Where is the sales area of iron ore and how about the movement recently?

Yu: The company mainly sells material in northern China as Shougang Steel is one of the long-term cooperators. There will be 3,000t of DPRK iron ore arriving at Qinhuangdao, which will be delivered to Shougang Steel, and more materials will be delivered to ports in North China. However, vessels in DPRK has small deadweight of 3,000-5,000t, which limits imports of iron ore.

Asian Metal: Your company focuses on business of DPRK iron ore, what superiorities does the material have compared with mainstream iron ore?

Yu: Compared with mainstream iron ore in Australia and Brazil etc, DPRK iron ore has following three advantages:

Firstly, lower prices. The DPRK government monopolizes iron ore mines and is willing to sell iron ore and iron ore fines to Chinese clients at a discount.

In addition, DPRK borders on North China which allows shorter haul distance as iron ore could be transported from Nampo in DPRK to Qinhuangdao in China within 3-4 days, and the short distance is an incomparable superiority that mainstream iron ore from Australia and Brazil etc do not have.

On top of that, due to the lagging economic development and bad mining capacity, there are still plenty of raw iron ore resources in DPRK, compared with those in over exploited mines in other countries.

Asian Metal: What superiority does you company have on business of DPRK produced iron ore?

Yu: Seeing the distinctiveness of DPRK, building a good relationship with local cooperators is very crucial. We have cooperated with DPRK for a long time and have a cordial relationship with the local government. Furthermore, the company has signed supply agreement with several iron ore mines in DPRK, and these safe suppliers can guarantee the monthly iron ore supply.

Asian Metal: How do you think of the iron ore market in Q2 as it sees signs of recovery after the Spring Festival in 2013?

Yu: Iron ore market in northern China experiences the most transactions from March to June every year, and I believe that reasons for the appreciation in Q2 are as follows:

Firstly, construction projects resume production in Q2 along with warmer weather in northern China, so steel prices will climb along with increasing demand, which will boost the price of iron ore fines.

Secondly, the NPC and CPPCC to be held in March will hinder the regular resumption of production of iron ore mines in North China, reducing the available material in the market. However, the demand remains strong as steel mills procure actively after the Spring Festival for stockpile.

In addition, the new government is unlikely to regulate and control domestic economy drastically, aiming to stabilize the economy and society, and create a sound political environment without big moves.

Asian Metal: Thank you for accepting the interview with Asian Metal and wish the course of your company to step on a higher level.