Asian Metal: Good day, Ms Zhuang. Thanks for granting the interview of Asian Metal. Firstly, please make a brief introduction of Zhongcheng.

Zhuang: Zhongcheng mainly produces silicon metal and silicon metal powder and we also trade some other materials such as polysilicon, magnesium ingot and the raw materials for silicon metal production such as refinery coke and coal, etc.

We have manufacturing plants and R&D Centers in Yingjiang, Yunnan Province, Huaihua, Hunan Province, Xinyu, Jiangxi Province, and offices in Xiamen, Beijing and Shanghai, to offer most high-quality services to the clients more conveniently. We have seven 12500KVA silicon smelters in Yunnan Province, with annual capacity of 50,000tonnes silicon metal, and two silicon powder grinding factories with annual capacity of 50,000tonnes silicon powder. Our main Products are: silicon metal and silicon powder, which are widely used in variety of industries, such as, aluminum alloy, organosilicone, polysilicon, electronics, refractory materials and so on. Main silicon metal grades include 2-2-0-2, 2-5-0-2, 3-3-0-3, 4-1-1, 4-2-1 and 4-4-1. The silicon powder sizes are in the range of 40mesh to 325 mesh, which also can be processed according to customers’ specifications

Asian Metal: How about the market for silicon metal and silicon metal powder recently?

Zhuang: South China entered the normal water and the dry season gradually after November 2012, and the power price increased and the operating rate for silicon metal smelters decreased. Moreover, Chinese silicon metal export duty was cancelled since January 1st 2013, which stimulated the export market to some degree. Therefore, Chinese silicon metal prices increased in November to January. Our plant just runs part of the capacity now.

It is known that global PV industry was weak in 2012 and polysilicon was in oversupply. Polysilicon prices fell sharply and 90% of the polysilicon plants in China stopped production. Therefore, the demand for silicon metal powder was low and we just kept some orders from regular customers, but their purchasing volume also decreased.

Asian Metal: The US applied the “Double-anti” (anti-dumping and anti-subsidy taxes) on Chinese solar products and China also started the investigation of “Anti-dumping” on the solar grade polysilicon from the US, South Korea and EU. What influences will this round of solar war bring to silicon metal market?

Zhuang: Economic globalization is becoming more obvious and the trading war could only bring to lose-lose situation. If China begins to impose the “Anti-dumping” tax on polysilicon from the US, South Korea and EU, this will stimulate the domestic silicon metal prices to move up to some degree and some polysilicon plants in China will resume production. Thus, the demand for silicon metal powder will increase. While meanwhile, the production cost for domestic silicon wafer and module plants will increase and they will lose the competitiveness in global market. The “Double-anti” is a double-bladed sword.

Asian Metal: Where are the main sales regions for your silicon metal and silicon metal powder? How was the trading situation recently?

Zhuang: In Chinese domestic market, we mainly sell silicon metal to Pearl River Delta and Yangtze River Delta. We also export silicon metal to other countries and areas in Asia, Mid-East and Europe. The silicon metal export market picked up a bit as the silicon metal prices increased sharply and some consumers prepared stocks before the Spring Festival holiday.

We mainly sell silicon metal powder to those major consumers home and abroad. However, the operating rate for polysilicon plants kept low recently and demand for silicon metal powder was limited. Our sales volume for silicon metal powder decreased recently.

Asian Metal: Let’s review Chinese silicon metal market last year. 2012 was a tumultuous year for Chinese silicon metal market as the price plunged combined with large scale of production halt as a result of decreased domestic and international demand. Chinese silicon metal prices kept dropping from early 2012 to October, what were the reasons? After October, South China entered the dry season gradually and silicon metal prices began to pick up. Then the silicon metal prices increased sharply in January 2013, what were the reasons for the fast price rise?

Zhuang: In 2012, Chinese silicon metal prices fell continuously before October and the main reasons were that demand from downstream industries in domestic and oversea markets was weak under the unfavorable global economy and the overall silicon metal market in China was in oversupply. Into the dry season, many silicon metal smelters in China stopped production gradually under the increasing electricity price and tight power supply. Moreover, Chinese silicon metal export duty was removed from January 1st 2013, so the silicon metal prices increased sharply in January.

Asian Metal: One of the hottest topics in silicon metal market recently was the cancellation of the 15% export duty on Chinese silicon metal. Where will Chinese silicon metal export market move under the new export term?

Zhuang: The World Trade Organization (WTO) ruled on January 30th 2012 that China unfairly limited exports of nine raw materials to protect domestic manufacturers, which were bauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorous and zinc. The State Council of the people's Republic of China approved the “The Application Plans of Customs tariff for 2013” and published it on December 17th. The policy will be executed from January 1st 2013. In the list of “Customs tariff for exporting materials“, there was not any information about silicon metal (Customs code 28046900). It means that China will cancel the silicon metal export tax (which is currently 15%) from January 1st 2013.

After the cancellation of the export duty, Chinese silicon metal export market saw more inquiries. However, as domestic silicon metal prices increased sharply, the silicon metal export prices did not drop as much as 15% compared with the prices with export duty. Many silicon metal buyers in oversea market incline to watch the market now and the export market is likely to see more orders after the Spring Festival holiday.

Asian Metal: How do you think about the silicon metal market trend after the Spring Festival holiday?

Zhuang: Before the Spring Festival holiday, some silicon metal smelters were under capital pressure and lowered prices a bit to promote sales. After the Spring Festival holiday, the operating rate for Chinese silicon metal smelters will keep at low level for a while and the prices will not change much before April. The future market trend mainly depends on the demand and the production situation of smelters. As for the downstream industries, some Chinese domestic polysilicon plants may resume production if the anti-dumping tax to be applied on imported polysilicon. But where the market will go depends on the situation of global solar market. Chinese silicon metal market will continue to see different difficulties this year. If demand does not pick up, Chinese silicon metal prices are likely to decrease in April or May, when South China enters the rainy season, on the decreasing power price and increasing operating rate.

Asian Metal: Asian Metal is going to hold a silicon-related conference, World Silicon Forum 2013 on May 23rd to 25th in Xiamen, Fujian, China. Major Chinese and international silicon market players are going to be in Xiamen at the time and discussed the silicon-related markets. Thanks for the support from your company.

Zhuang: Being conscientious, objective and professional, Asian Metal provides valuable information of the metals market. It is expected that Asian Metal will establish a communicating platform for market participants within or related to silicon industry from all over the world, where producers, traders and consumers of silicon metal across the world will congregate to discuss the development and outlook of the silicon industry. As one of the sponsors, we will try our best to support this forum.

Meanwhile, taking this opportunity, we also welcome old and new friends to visit our Xiamen office.

Asian Metal: Thanks for your support. Wish a bright future of Zhejiang Zhongcheng.