Asian Metal: Thank you Mr. Wang to join our interview. As the largest ferrosilicon producer in the world, what's the annual capacity of Erdos' each plant and their current operation condition?

Mr. Wang: Erdos owns 72 various kinds of sized furnaces in Inner Mongolia in total, and the annual capacity could reach 1.45 million tons, and there are two subsidiaries in Qinghai named Baitong and Huadian respectively. Baitong's annual capacity is 300,000t and 250,000t is for Huadian, and all three plants are running regularly now.

Asian Metal: As one of the main ferrosilicon suppliers for steel mills in China, please briefly review the demand of steel mills in 2019.

Mr. Wang: We're supplying ferrosilicon to about 130 steel mills in China. Discouraged by the weak demand in steel products export market amid the US-China trade friction in 2019, Chinese government drives the domestic demand aggressively. The crude steel output reached 0.996 billion tons in 2019, up by around 8.3% YOY. We predict the output of crude steel would keep firm in 2020, and the demand of ferrosilicon would increase.

Asian Metal: Japan is one of the largest steel products' output countries, how about the demand performance in Japan in 2019 YOY?

Mr. Wang: The ferrosilicon demand in Japan is relatively stable in 2019 YOY. The demand of steel products for the infrastructure construction for Tokyo Olympics 2020 has reached the peak in 2019. Additionally, one of blast furnace in Nippon Steel was damaged in the typhoon in September in 2019, and it didn't resume production until now. Overall, the general demand of ferrosilicon in Japan slipped slightly against 2018. The import volume of ferrosilicon in Japan reached 420,000t in 2019 and 450,000t in 2018. >From what I know, the gross steel output in Japan is lightly less than one hundred millions but around 99 millions, which is relatively stable as 2018.

Asian Metal: How about the demand performance in South Korea in 2019?

Mr. Wang: The annual demand in South Korea stabilizes at 270,000t in 2019, relatively stable.The largest steel mill in South Korea - POSCO steel monthly consumes around 10,000t of ferrosilicon, including standard, low aluminum and high purity ferrosilicon in total.

Asian Metal: Regarding standard, low aluminum and high purity ferrosilicon, what's the respective percentage of different standard ferrosilicon demand from steel mills in Japan?

Mr. Wang: High purity ferrosilicon is widely used in Nippon and JFE steel mills in Japan, and there is minor demand from other industries like refineries and foundries. Generally speaking, the consumption volume of ferrosilicon with high purity and low aluminum is about 90,000-100,000tpy, amounting 20-25% of the total ferrosilicon demand in Japan.

Asian Metal: Prices of ferrosilicon sourced from Russia and Malaysia is usually lower than Chinese ferrosilicon because they don't have to pay export duty. Consequently, the export volume of Russian and Malaysian ferrosilicon to Asian increased in 2019 YOY. How do you predict the export situation for Chinese ferrosilicon in 2020?

Mr. Wang: The annual production capacity in Russia is about 700,000t, and the Russian steel mills could consume 250,000t annually, and the rest exports to Asia, Europe, United States and other regions. The annual ferrosilicon production capacity in Malaysia is around 250,000t, and Malaysian producers mainly focus on Europe, Southeast (especially in South East Asia) Asia and the United States. From the demand perspective, Japan annually imports about 450,000t; South Korea imports 300,000t; the demand from India is about 150,000t; there is sort of demand from other countries like Vietnam and Indonesia etc. The whole demand in Asia is over Russian and Malaysian supply capacity. It's needless to say that they hold long-term contracts with European and American clients. Therefore, Chinese ferrosilicon has huge export market. Erdos has our own sustainable sales channels in Asia, and we predict the export volume would increase in 2020.

Asian Metal: The demand in Japan and South Korea is relatively stable, and most mainstream steel mills in Japan and South Korea have mature and sustainable supply channels. What are the Chinese ferrosilicon new export destinations?

Mr. Wang: The Chinese steel mills would release their production capacity further in 2020. The international steel mills, especially in Southeast Asia would unleash their production capacity further as well in 2020. Taking ASEAN (Association of Southeast Asian Nations) for example, the current crude steel annual production capacity would reach 35,000,000t, and they will ramp up crude output further in 2020. Many steel mills in China, Japan and South Korea made investments in Indonesia, Vietnam, Thailand, Malaysia and India. The overall crude steel output in ASEAN would reach 90,000,000t in 2023, therefore the demand of ferrosilicon in the region would boost.

Asian Metal: Coronavirus epidemics wildly swept in China in February, and the serve epidemics condition was slightly relieved in March. How do you evaluate the future ferrosilicon price trend in China?

Mr. Wang: The epidemic prevention and control is the most prioritized mission in China now. We have limited transportation lines unblocked in February, and the supply was sharply cut last month. We utilized water way and high way in combination to supply ferrosilicon to steel mills in South China in February. As many ferrosilicon plants hold heavy stocks, the ferrosilicon price would slip in March. However, Chinese economy is flourishing in long term. Along with the recovering and climbing operation ratio in real estate industry and infrastructure construction industry, the inventory of steel products would reduce step by step. We predict the ferrosilicon price would touch the bottom line and rebound along with the increasing demand from steel mills in the next few months.

Asian Metal: Thank you for your time Mr. Wang.

Mr. Wang: Thank you.