Asian Metal: Good afternoon, Sir, and thanks for accepting the interview. First of all, please talk about the macroeconomic environment this year as a whole.

Wang: The overall economic situation is bad, especially in the manufacturing industry. From micro perspective, companies generally have low profitability ratio. Half of companies’ year's output will be lower than last year, and most companies have no new investment. We here are relatively developed areas, and the economy situation is still so sluggish, not mentioning how lethargic it will be in the overall country.

From the perspective of national policy, it is not likely that the Government would invest four trillion to stimulate economic development as in 2008 financial crisis, so in the short term the economy will not quickly bounce back to double digit growth rate. The new generation of government leaders also launched a series of pragmatic reform policies, so we can judge that it is possible to see the market gradually improve, and it just needs a long period of time.

Asian Metal: Combined with the current operating performance and the development of your company, please talk about the current green silicon carbide powder market situation, and what are the main difficulties and problems enterprise faces now?

Wang: As to green silicon carbide market, I mainly wish to limit my observation and opinion to the application on PV industry.

On silicon wafers cutting, after two years of crisis management, all wafer factories still in operation are all trying their best to reduce production cost. Silicon carbide is one of the key factors of cost reduction, so the price of silicon carbide powder is pressed close to the cost price. Besides, in respect of recycled silicon carbide, the proportion is increasing, and 80% recycling sand proportion is very common. So, the general market demand is falling down in the past two years, and most of the enterprises keep off-production or half off-production now.

The larger companies have the biggest pressure these two years, because they directly in the face of PV silicon wafer cutting companies. These companies are in poor situation over the past two years, and the financial condition is very bad. Affected by these factors, the large scale silicon carbide enterprises are fraught with difficulty and have heavy pressure in having adequate working capital for daily operations. Production capacity can be adjusted by reduced output or off-production, but the financial cost can not be reduced quickly, and months loss is inevitable. Thus the larger scale of an enterprise, the higher the exposure to losses they get.

Currently demand for different specification of products is not very balanced in silicon carbide powder market. JIS1500 and JIS2000 are the mainstream products, and other JIS1200 is relatively difficult to sell. This is one of the biggest problems in the silicon carbide powder market, for It brings many risks if the market is unable to fully digest all products and causes the high inventory in enterprises.

We can only expect the downstream section factories profit, which can improve the whole industry’s chain of cash flow and reduce the financial cost. Besides, we also expect that the whole market demand for JIS1500/2000/1200 can be balanced in order to timely digest inventory of producers. By this way, it can bring a glimmer of hope to the development of the enterprise. Even if the silicon carbide powder enterprise are profitable, its return on investment would be very low and the market will also no longer attract more capital put into the industry. So, within a short to medium term, the industry can't ease the financial pressure and there is also a long tough period to get through.

Asian Metal: As to the new dynamic about photovoltaic market recently, including the European anti-dumping and anti-subsidy results, and the new policies launched by the government to support photovoltaic industry, etc., what kind of impact do you think will exert on the PV market?

Wang: For photovoltaic industry, EU has decided not to impose anti-dumping and anti-subsidy duty on Chinese PV products, so that Chinese enterprises can still hold a part of market shares in Europe. As to the domestic market, many new policies have been launched to support solar industry, but there still need time for many details of the policy to come out.

In general, the photovoltaic market will have a good time for development within three to five years. However, it will also require industry adjustment and streamlining for the enterprises, and only some big companies can continue to operate efficient and profitable business, which probably could mean state-owned enterprises dominating. More than half of photovoltaic enterprises will disappear during the period.

Five years from now, if the cost of photovoltaic products can be as low as needing no subsidy from government, the photovoltaic industry can really grow. On the contrary, if it still need a large number of state subsidies to develop, I estimate that the state's subsidies will be shrinking, and industrial development scale will be consciously compressed. So total domestic installed capacity would not increase by dozens of percentage development rate from year to year, and government will also decrease the subsidy and compressed the space of industry development, just like the current situation in Germany and other European countries.

That is to say, the next development opportunity for photovoltaic is only 3-5 years. The key is to reducing photovoltaic products cost and generating profit without the state’s subsidy. Otherwise, it’s just a short transition period for the industry to avoid crisis.

Asian Metal: Please tell about your opinion for the trend of green silicon carbide powder market and when do you think the market can improve?

Wang: I think it is unlikely that green silicon carbide powder market can see much development only expecting the recovery of PV market demand. Even if the photovoltaic market improves and the demand recovers, the demand for green silicon carbide powder will not increase a lot, especially the consumption for virgin green silicon carbide powder, and the reasons are mainly as follow:

First, the current slice technology has already made the best use of recycling sands and wafer producers also try to reduce consumption of virgin silicon carbide powder;

Second, Silicon carbide wafer producers would press the price of silicon carbide powder to lower production cost in order to survive in current fierce completion. So it is unlikely we see a high profit in future for silicon carbide powder market.

Third, in view of the trend of slice technology, the main process is likely the diamond cutting, instead of wire-electrode cutting. So the alternative is just a matter of time. Besides, if the PV market warms up substantially, wafer producers would be willing to update the slice technology and the demand for silicon carbide powder would shrink further.

Above all, I think the green silicon carbide market is hard to warm up substantially if we only depend on the demand from PV market. The market needs a new industry demand for green silicon carbide powder.

Asian Metal: Do you have any suggestions to the government or market participants?

Wang: Silicon carbide is a kind of new materials with striking feature. It has many application fields, but the research is not enough. The industry will transform rapidly if we can explore some new frontiers on the application of silicon carbide powder under the pressure of industry crisis.

Asian Metal: Thank you again for accepting the interview and we wish you success.

Wang: Thanks! We appreciate supports from Asian Metal.