Rare earth polishing powder prices expected to stabilize
----Interview with Wang Xingang, general manager of Baotou Hailiang Science and Technology LLC.
Asian Metal: GM. Wang, thank you very much for accepting Asian Metal's interview. First of all, could you please give us a brief introduction to your company's background and main businesses?
GM. Wang: Founded on 4 May 2009, Baotou Hailiang Science and Technology LLC. (hereinafter referred to “Baotou Hailiang”), with the registered capital of RMB14 million, mainly engages in production and sales of high performance rare earth polishing powder, sales of rare earth products, relevant utilization technology research and technical services of rare earth, and sales & technology services of photo-electricity and wind-electricity products. Located in the industrial park of rare earth application in Rare Earth High-tech District of Baotou, Inner Mongolia, our company covers an area of about 16,700 square meters and owns four standard workshops and one office building.
As a national-level high-tech enterprise, Baotou Hailiang is a member unit of Association Of China Rare Earth Industry (ACREI) and Baotou Rare Earth Industry Alliance as well as a preferential raw material supplied company of China Northern Rare Earth Group and an introduced enterprise in Rare Earth High-tech District of Baotou, passing the attestation of International Quality Management System ISO9001:2008.
With becoming a professional manufacturer of rare earth polishing powder as the market positioning and strategic objective, Baotou Hailiang has developed into a modern enterprise which mainly produces rare earth polishing powder used in mobile phone cover, TFT glass and optical glass industries. We own the domestic leading production line of the material, with products sell well in mainland and Taiwan, China.
Baotou Hailiang outdoor scene
Asian Metal: Thank you for the introduction of your company. Would you please introduce your basic occupational experience?
GM. Wang: After graduating from College of Mechanical and Electrical Engineering of Inner Mongolia Agricultural University in 1987, I had been engaged in the research of mechanical engineering, and stepped into the rare earth industry in 2008, setting up Baotou Hailiang and starting R&D and production of rare earth polishing powder since then.
Asian Metal: As a market insider with rich experience, would you please give an introduction to the current conditions of capacity, output and upstream and downstream stocks in the rare earth polishing powder industry?
GM. Wang: Currently, domestic rare earth polishing powder capacity reaches 60,000tpy, while the output is merely 22,000t. Most capacity is for low-end crystal and polishing powder used in plate glass, with high-end polishing powder capacity of only 15,000t. Many plants of low quality and low capacity basically suspended production and only plants of high quality are under production now. Upstream raw materials of polishing powder are generally controlled by China Northern Rare Earth Group with sufficient capacity and continuously rising prices, and downstream consumers basically make no stockpiles.
Asian Metal: According to your understanding of the market, what would the increasing volume be? And please share us your forecast of the annual growth rate of output in the polishing powder industry this year? What would be main reasons for the rise?
GM. Wang: The polishing output is expected to reach 28,000t this year, with the growth up to around 30% YOY. Reasons for rises in output are attributable to that mobile phone cover plate consumption increases, and consumption of polishing powder picks up substantially as both sides of mobile phone use glass now while only the forepart utilized glass previously.
Asian Metal: Since mid-April this year, China Northern Rare Earth Group suffered from sales limitation of products such as LaCe carbonate and cerium carbonate due to mandatory plan of Ministry of Industry and Information Technology (MIIT), and have you ever been affected by this? How do you deal with tight supply of raw material since then? What’s the supply-demand pattern do you expect this Q4 and in 2018?
GM. Wang: Yes, we are affected by that as well. Fortunately, the influence we underwent was limited and we produce normally at present, as we are a member unit of Association of China Rare Earth Industry and Baotou Rare Earth Industry Alliance as well as a preferential rare earth raw material supplied company of Baotou Steel and have signed long-term supply contracts with China Northern Rare Earth Group. As far as I am concerned, the government will control supply to stabilize raw material prices, which, however, will result in a condition of balanced supply and demand as well as reasonable prices but not tight supply in the market.
Workshop
Asian Metal: According to price data of Asian Metal, Chinese LaCe carbonate price has increased sharply so far this year, how about rises in prices for rare earth polishing powder? What do you think are reasons for rises? What is your opinion of the market outlook?
GM. Wang: With uptrend of raw material prices, prices for rare earth polishing powder move up reasonably accordingly, but we won’t see surges in prices like 2011. Main reasons for increases in polishing power prices are rising raw material prices, and prices will tend to stabilize in the future market.
Asian Metal: The rare earth polishing powder industry is a main downstream industry of rare earth downstream products and LaCe products, and what are the development characteristics of the industry currently? As a major domestic producer in the industry, what do you think is the gap between scale, quality, varieties, prices and customer service of China’s polishing powder products and those of overseas enterprises? How can the rare earth polishing powder industry to seek development in the further market?
GM. Wang: Prices for LaCe products were relatively at low level previously due to oversupply, but prices are gradually reasonable at present, which benefits suppliers as well as consumers. Currently, despite large production scale of polishing powder in China, the quality is still at medium-and-lower level with various varieties and prices are different significantly. The after-sales service needs to be improved further. The development direction of polishing powder is high-grade and customized products.
Asian Metal: Rare earth polishing material plants actively expand polishing liquid products in recent year, and what are market shares of polishing powder and polishing liquid markets respectively? What are differences between their customers?
GM. Wang: The polishing liquid market is just starting currently with no large scale; polishing liquid demand will pick up with increasingly high quality requirements of customers who are basically high-end customers.
Asian Metal: It was my honor to visit you on 30 December last year. How about your operating conditions, production and sales at present? What are your plans for polishing powder business in Q4 2017 and in 2018?
GM. Wang: Currently, we are running at full capacity and sell products immediately after they produced, holding no stocks and with producing and selling volumes of up to 1,500tpy respectively. We plan to add another production line late this year and expect to see the output of 3,000t next year.
Asian Metal: Recently, Association of China Rare Earth Industry suggests that imported ore should be listed in mandatory plan indicators. Do you think the large amount of imported ore and LaCe products in the domestic market will impact polishing powder enterprises?
GM. Wang: I think the influence is limited as we make development based on product quality rather than raw material.
Staff spirit
