| Green silicon carbide powder market to be promising | |||
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Asian Metal: As far as I know, the quality of green silicon carbide powder produced in Orient Nanko is the top-ranking material in China. Mr Li: Certainly. It is not difficult to master the technology of green silicon carbide powder, but it takes large cost to produce better quality powder. Therefore, the low quality materials could be sold out easily last year, when the demand was strong, because many enterprises did not focus on the quality of powder. This year, the requirement on granularities is narrower, which means the output rate will be lower; the other one is the requirement on shape. To meet the new requirements, we need to change the processing methods. The main processing equipments are micro ball-mill，ramond grinding machine and air-flowing machine. This year, the best selling materials are produced by ramond machines. Asian Metal: Are there more requirements on the green silicon carbide lumps if the classification is by water? Mr Li: Yes, it will need a high density of lumps. No matter what kind of furnaces, it was easy to be accepted. However, if the furnace capacity is less than 12,500kw, it will not be sold out this year, which causes more smelters establish big capacity furnace. The newly built furnaces set up recently were more than 12,500kw in capacity. And some others trialed the furnaces with capacity of 15,000kva and 16,000kva, and they have succeed. We are now consuming green silicon carbide lumps produced by 16,000ka furnace in Gansu province. Asian Metal: What about the operating rate？ Mr Li: I think it is 70% at most. In May, many silicon carbide enterprises were out of production. Though Ningxia government issued a policy to reduce the power price by RMB0.08/kwh, many smelters still did not produce in view of the financial difficulty with circulating capital amid the weak demand from downstream consumers. Asian Metal: Yes, many smelters are facing the problem of a lack of circulating capital. Mr Li: The silicon carbide industry is both labor intensive and capital intensive. Asian Metal: It consumes power, discharge pollutants and needs large amounts of capital to maintain the production. The downstream smelters ask for cash payment terms even though the demand keeps slow this year. Mr Li: Currently, the high quality lumps are still in short supply, while the common materials are in large stockpiles. The big smelters ask for payments before delivery or at the end of one month. The main reason is that many participants in this industry are not in good credit standing. Due to the tight availability of circulating capital, suppliers request payment before delivery. I think it is attributed to the lack of credit. Asian Metal: Has the financial difficulty been alleviated slightly compared with that in Q1? Mr Li: I don’t think so. For more smelters to resume production, they will need more cash to maintain the production. Now many downstream consumers make payment after three months, which affects upstream suppliers who are in financial difficulty. Asian Metal: We know that the demand is increasing, but many producers are still out of production due to financial difficulties. Mr Li: Yes, it is quite difficult. What you said is the fact. Since powder production is easy to get profits with low investments, more and more participants begin to produce when the demand was strong. However, it also causes large differences in quality and prices due to oversupply. Asian Metal: From the beginning of this year, many medium and small-sized producers built the water-classified production line and they supply the materials to end-users to make more profits, but the result is the differences in quality. Mr Li: Yes. In China, there are only several major large-scale powder producers, but too many small-sized producers and even many individual ones in the spot market. I think is the main reason for quality differences, which cause the market in chaos. We always face the problem when negotiating the prices. Asian Metal: With high-quality materials, we can get a better price, but some other suppliers press down the prices by the excuse of lower prices in the spot market. Mr Li: In this industry, many end-users, the polysilicon wafers producers, have little knowledge on the function of silicon carbide and the cutting technology. Once they come across some problems, many of them do not solve it by technology but blame their suppliers. Asian Metal: Please introduce Orient Nanko to us. Mr Li: Orient Nanko is a subsidary of Orient Tantalum Industry Co.Ltd who cooperates with Nanko, with 90% of shares in stocks. Our company was put into production from April 18th, and the output in June is 600-700t and at the end of July it will be 1,000tpm, which means that the first phase project will run at full capacity. The total annual capacity is 13,000-15,000tpy. The second phase project is under construction, with full capacity of 30,000tpy, which will be the largest powder enterprises. |
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