Asian Metal: First, thank you for your support to Asian Metal and agreeing to this interview. Could you introduce the general situation about titanium sponge market?

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Liu: Overcapacity still exists in domestic titanium sponge market---the total capacity reaches 100,000-120,000t while the demand is only 50,000-60,000t per year. When Chinese producers choose to enter a market, they weigh more on the current state of a market that runs well with higher prices, rather than thoroughly analyze the supply and demand in the market.

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Asian Metal: So what’s the impact of the current state on overall Chinese titanium sponge market development?

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Liu: On the face of it, the market and even every producer will suffer from price downticks caused by the oversupply. Moreover, some enterprises will cease production or leave the market due to losses of funds. However, the oversupply also has benefits in the long-term for the market as it exacerbates competitions to weed out some unqualified enterprises and makes a healthier market. Enterprises have to make great efforts to keep competitive rather than compete though lowering prices. In addition, a slow market can avoid blind investment and lead to better development.

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Asian Metal: Thank you very much for your introduction and analysis. Could you introduce your company?

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Liu: Chaoyang Baisheng Titanium Industry Co., Ltd, formerly named Chaoyang Baisheng Zirconium Industry Co., Ltd and Chaoyang Baisheng Zirconium & Titanium Co., Ltd was founded in November, 2003. The company started producing zirconium tetrachloride as a small company, and now it is one of the biggest producers of titanium sponge with an annual capacity of 500t of zirconium sponge, 8,000t of titanium sponge, 2,000t of fine zirconium tetrachloride and 20,000t of fine titanium tetrachloride along with a sale revenue of almost RMB600 million per year. The company renamed Chaoyang Baisheng Titanium Industry Co. Ltd after shareholding reform in August, 2010，in order to adapt to market development. The company now focuses on zirconium sponge producing and aims at developing titanium industry by utilizing all its advantageous resources. Located in the industrial park in Chaoyang County, Liaoning Province with an area of 209mu, the company is the first of its kinds that lift the production rate of qualified zero grade product from average level of 20-30% to higher than 80% in this industry, setting an milestone of the quality and technology development of titanium sponge. Its products not only sell well domestically, but also are sold to more than ten countries and regions including Germany, USA, Japan, South Korea, UK and Sweden and are applied to industries like aviation, aerospace, sailing, military project, medical treatment and desalination of sea water, etc.

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Asian Metal: How about the production line of titanium sponge in your company and what are your advantageous?

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Liu:We are an early entrant to titanium market being the first private as well as the third largest producer for titanium sponge. The quality of our products has been recognized according to the feedback from our clients for so many years because we have relatively mature techniques. Our company first put forward splitting the whole producing process for the material in China and created half producing process in 2004 with its own benefits like making the production more professional and leaving up many troubles. We also upgrade the material actively to meet the needs of clients and remain competitive. The most important thing is quality and our products have public praises in the market. In addition, the dry local climate in Chaoyang fits titanium sponge production as it prevents oxidization by wet air.

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Asian Metal: Producers have different attitudes toward current sluggish titanium sponge market. What’s your plan for developing in the future?

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Liu: Many enterprises invest in the market and establish plants after titanium sponge prices and profits increased significantly from last year. It becomes easy to start business in the market as every now and then new production lines of ten thousand tons are put into operation. This damages both the market and enterprises as the price dropped from more than RMB90,000/t to RMB60,000-70,000/t, making many companies realize the pain of investing and expanding blindly. I think that the development of the market should conform to reality and make one step at a time instead of imagining big profits all at once. Our company will focus our capital and efforts on optimizing development structure and improving product's competitiveness for a new breakthrough while stabilizing output. We are also exploring export market actively for the material and we plan to process some titanium sponge into high value-added products in the future.

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Asian Metal: Since your company owns manufacturing shop for titanium tetrachloride, could the output cover your own needs?

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Liu: The output only meets 1/3 of our demand and we have to procure more titanium tetrachloride from other plants.

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Asian Metal: Does your company plan to lift the output of titanium tetrachloride?

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Liu: No. We do not have this plan because the production has great damages to the environment and local government forbids increasing titanium tetrachloride production in case of polluting the environment.

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Asian Metal: What’s your expectation towards titanium sponge market in Q3?

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Liu: The market did not run very well this year as the demand kept sluggish with decreasing prices from late Q1 to mid-Q2. However, procurements rebounded at the end of this quarter for two reasons: firstly, some buyers intend to invest in rock-bottom market; secondly, consumers who stayed out of the market when the price was droping need to replenish inventory as they are running out of stocks.

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According to current economic situation domestically and abroad, it is improbable for the economic to rise next quarter, and the demand for titanium sponge may keep slow as before, so titanium sponge market is likely to keep sluggish in Q3.

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Asian Metal: Do you have any suggestion to the development of titanium sponge market?

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Liu: I opined that producers need to be rational and to avoid blindness in investment and starting a program, if the market wants a steadily long-term development. Theoretically, titanium sponge price would keep decreasing when more producers enter the market and only in this way can people be aware of the fact and then form a health market. Producers will not be rational until they suffer difficulties.

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Asian Metal: Thanks again for your cooperation with Asian Metal!

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Liu: Thanks!

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