Asian Metal: Thanks for the chance of an exchange of news and opinions on the market with you, Ms. Wu. Would you please give us a brief introduction to Guizhou Hengzhao and your business?

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Ms. Wu: Our company majors in minerals and minor metals such as selenium, tellurium and bismuth. Selenium is our major product and is now popular in Yunnan, Guangxi, Guizhou, Sichuan, Hunan and Chongqing areas. As the sole agent of JCC in Guizhou province, we are a large supplier of selenium dioxide and also process some selenium dioxide by selenium powder imported by other agents. The monthly supply is about 20-30 tons. We would also consider importing selenium directly in the near term.

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Asian Metal: How is current selenium market going?

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Ms. Wu: Selenium price has been rising very quickly in domestic market due to the higher offers from foreign suppliers and the increasing demand after the Spring Festival.Though manganese price does not rise much, manganese smelters have to replenish stocks of selenium dioxide while due to the short supply, suppliers are very reluctant to sell for the moment.Selenium price goes up to USD36-38/lb in overseas market and almost RMB700/kg in domestic market. Selenium dioxide price is above RMB500/kg while the production cost is almost RMB500/kg.

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Asian Metal: As we know, copper output increased in 2009. Some participants thought then selenium supply should increase as well. What do you think?

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Ms. Wu: Though copper output increased in global market, we cannot say that selenium supply also increased. For the moment, many copper comes from recycling of waste copper but selenium only sources from anode mud of copper refinery which does not increase much.

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Asian Metal: Would you please make a brief introduction to the current selenium output in Chinese domestic market?

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Ms. Wu: China also produces some selenium powder but it only supports about one third of the total demand and as demand is very large in domestic market, the consumers still have to import large quantities of selenium from overseas market.

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Often in the end of every year, many copper refineries would shut for maintenance and selenium output would reduce as a result. And then the buyers rely more on sources from overseas market. During this period, selenium price in Chinese domestic market is more easily affected by the global market condition.

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For the moment, JCC is still the sole producer with large quantities of selenium output. Though Yunnan Copper, Tongling Nonferrous and Daye also produce selenium dioxide, the quantity is smaller.

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Asian Metal: Is the demand strong from downstream consumer markets?

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Ms. Wu: For the moment, downstream glass and ceramics industry stays low and selenium demand is not active from this field. And selenium dioxide demand from manganese industry remains the main impulse of selenium demand in China, which takes up 80% of the total quantity these days with varying according to different time periods. And this means that selenium and selenium dioxide prices usually follows if manganese price changes though sometimes it is exception while selenium supply is very tight.

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For the moment, downstream manganese smelters are not active in buying while many of them would only return after the Lantern Festival. In March, the demand is expected to increase but buyers may be very cautious if the selenium dioxide price rises too quickly. Some traders have already returned for some orders these days.

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Asian Metal: How about the current manganese market performance?

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Ms. Wu: Downstream manganese price does not rise much, which I think is normal. For the moment, manganese market is not active yet while buyers mostly just returned from holiday and downstream stainless steel mills need some time to prepare the purchasing of raw materials. But the truth that manganese price rises a bit and the production is increasing has already shown the participants’ confidence in the future market. Some traders have started to buying since late last month and manganese supply is not very large in overseas markets.

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Asian Metal: Is there any transaction principles in selenium market?

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Ms. Wu: Generally speaking, suppliers would prefer long term contracts to reduce the risks of market trading. But often there would be materials for some extra deals. If they are optimistic about the future market when demand is good, suppliers would hold some while for higher prices. So it is often the case that the price better, selenium supply is tighter.

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Once the inquiries increase in global market, the suppliers would surely increase their offers. These days many buyers are looking everywhere for some sources in the spot market, and selenium suppliers would be more reluctant to release stocks. And the expectation that selenium demand would stay firm in Chinese market also pushes the suppliers to increase their prices.

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Asian Metal: How is the current market supply of selenium metal?

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Ms. Wu: Many selenium suppliers and traders should have some stocks at hand but the quantity is not very large as many of them have long term customers who will buy regularly. No matter the price is rising or dropping, they should have to release some stocks at a workable price to the long term customers. Few of them would hold large stocks waiting for the price to rise further. Guizhou Hengzhao, as an agent of selenium dioxide from JCC, also has many long term customers. We will hold only little material at hand while the rest are sold according to demands from the buyers.

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Meanwhile, most selenium dioxide producers are from Guangdong or Hunan. And though some smelters other than JCC also produce some selenium powder, few of them process by themselves but sell to other buyers for refinery and none of them is so large as JCC. The price from the major two producers, JCC and Vital Chemical, is an indication of the market for their large quantity. Especially when the participants just returned from holiday, they are not quite sure about the market situation and could not decide on the offer, most of them would depend on the offer from the two major suppliers.

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Asian Metal: Thank you, Ms. Wu! Thanks for your precious time for this interview. We hope your business will be more prosperous this year!

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Ms. Wu: Thank you!