Wang Yanlong : Zinc oxide market has a long way to go

----Interview with Wang Yanlong, General manager of Weifang Longda Zinc Co., Ltd.

Asian Metal: Thanks for accepting our interview. Firstly, will you tell us your opinion on the current zinc price and the main reason that lead to the market in a fluctuating situation?
Wang : The zinc market is fluctuating for about one month as affected by other nearby markets. The electricity restriction, which is applied from November, causes many plants reduce their outputs. This reduction, however, could not offset the surplus of the international market. Two reasons contribute to this surplus: 1) World economy has not fully recover from the crisis of 2008 and the recovery of demand is a long and slow process. 2) Many plants expand their production capacity before the crisis. Now, the capacity could be fully released if the margin is high, however, this will cause surplus in short time. In the long run, we could say the market will go up as zinc is a kind of unrenewable material.After the implement of twelfth and five-year plan, the zinc industry plans to upgrade its production capacity, which will greatly affact the supply of zinc ingot. Zinc smelting is a high energy-consuming, for envornment reasons, so we think its expanding will be limited to a certain range. We could say zinc price will rise in long term. The fluctuating market may caused by two reasons :1) Hot money poured in this area；2) Real estate industry is restrained and many participants watch the market. The price of zinc has difficult to rise as the demand is low.
Asian Metal: The supply of zinc ingot exceeds the demand both at home and abroad in 2010, so what about the supply and demand in zinc oxide market ?
Wang: The demand of zinc oxide keeps increasing in 2010 and basically keeps a balance with the supply of the material, we find that the market is better than expected this year as downstream industries recover rapidly. However, the demand is unlikely to exceed the supply for the following reasons: poor self-discipline of the industry, low barriers to entry in China, easy craft of the products and backward technology.
Asian Metal: WTO declared that America won over the case of special protectionist tariffs on tire imports, which will affect the export of tire in China and the production will also face enormous pressure, so will the demand of zinc oxide as main accessories be affected ? Will the sale and production of your company be affected by the blocked export of tyre and do you have any suggestions for the participants ?
Wang: The water is not necessarily entering the sea from Yellow River, so the case will affect the tyre industry but the impact is limited and will not last long. We will exploit new market as the export of tyre is blocked in Amercica. Americans are not the only customer and the total demand of tyre will not drop. However, the tyre industry will surely be affected by the case, but the impact is limited for enterprises who are well prepared.
Asian Metal: What about the current status of your production compared with that in 2009 and do you plan to expand the production capacity in future ?
Wang: Our company commenced on a zinc oxide project with a production capacity of 60,000tpy of zinc oxide in 2009 and put it into operations in July, 2010 with annual output of 30,000t. The output double this year compared with that of last year and we plan to increase the production to 60000tpy of the material in the coming two years. As for the future, we mainly aims to produce high-end zinc oxide with nano-functions.
Asian Metal: As a leader of the industry, how do you think of the universal low entrance standard of zinc oxide market? And what do you think of furture market as the emerging of “zinc oxide workshops”?
Wang: the low entrance standard is owing to the imperfection and poor applying of national policies, which will stay in existance for a long time. “Zinc oxide workshops” have shortages in technology, scale of cost, quality, market reputation and risk resisiting ability, and unable to grow healthily, so though the amount is very large, the time of their existance is very short. The future market will take a road of scale-profit, high-technology and environment-friendly, there is a long way to go.
Asian Metal: How does the zinc oxide producted by zinc scrap weigh of your total output? As we know, the demand of zinc oxide produced by zinc scrap is very large, and rubber tire manufacturers prefer this kind of zinc oxide for the cheap price. Have your company considered about changing production structure?
Wang: The output of zinc oxide by zinc scrap is very small and is not to increase. The cost of the product is low, but the quality is not stable. The heavy metal contained inside can take great harm to the sodium sulfide which is used for conjucting rubber and wire. So giants in the rubber tire manufacturing industry do not adopt this kind of zinc oxide, what’ more, the tire price is effected mainly by plastic, steel, carbon ink and other bulk raw materials, the effect of zinc oxide is very tiny. A company cares about the quality of tires will not take the risk of harming their brand to use the cheap material which can cause problems in quality. But some Chinese companies are opportunism in using the material, which can be called “Chinese characteristics”.
Asian Metal: What’s your opinion on zinc ingot and zinc oxide market trend in new year?
Wang: There is no supply and demand relation in zinc ingot and zinc oxide market with the same price trend. The zinc oxide price depends on that of zinc ingot. It is anticipated that the price range of zinc would be higher next year than that of this year. However, there appeared great decrease after the rapid increase. The whole trend of globla economy next year will not smooth with overheated market, which will be controled by the policies. The general upward trend will no change.
Asian Metal: Do you have any advice on the companies concerning this industry confronting with the increasing fierce competition in zince oxide market ?
Wang: The competition is cruel. There will be no improvement without competition. What can we do? Different companies have different problems. At here, I’d like to give three pieces of advice to him: Firstly, giving full play to your own advantage to focus on different market; secondly,developing your own potential; thirdly, seizing the market opportunities.
Asian Metal: I’d like to show my thanks to Manager Wang for sharing your opinion on present market and your support to Asian Matal.
Wang: Thank you !