Asian Metal: Thank you for taking the time to conduct this interview Mr. Wang. Jinda Titanium is one of the most talked about companies in the titanium sponge world as you are working towards providing supply outside of civil use material. Could you give us a brief background on the company?

Mr. Wang: We mainly focus on titanium sponge production and our company is famous for the 0.83-12.7mm material with low Fe (0.02%-0.03%), low O (0.04%-0.05%) and low N2 (200%lower than the national standard) as the cornerstone of the titanium metal market has always been the aerospace market, the applications and the subsequent demand for titanium metal are constantly increasing. We are constantly working to improve the quality and cost basis to produce high quality titanium metal. Significant effort has been undertaken in the development of low cost, high quality sponge products. Overall, Jinda takes up a relatively large share in manufacturing aerospace grade titanium sponge, and has been the nominated supplier for companies like Baoti Group Co, Northwest Institute for Nonferrous Metal Research (NIN) and Western Superconducting Technologies Co. etc.

Asian Metal: Could you elaborate on the current development of the company thus far and give a few more details on operations?

Mr Wang: We have been running at full production capacity except in January and March due to the holiday season and periodical facility maintenance. By the end of October, Jinda produced more than 7,000 tonnes of titanium sponge, with nearly 9,000 tonnes expected at the end of this year.

Asian Metal: Producers marked up the prices in early November owing to the significant increases in production costs. Could you elaborate a bit on this?

Mr Wang: We also raised the price as pressured bitterly by the increased replacement costs. Currently, we keep quotations on hold with the titanium sponge 99.6%min pricing at RMB51,000/t (USD7,391/t) ex works and 99.7%min material at RMB52,000/t (USD7,536/t), a RMB2,000/t (USD290/t) price increase compared with late October. Besides, we adopt the make-to-order strategy and have been supported by regular clients on some long term contracts. However, it’s very difficult to make profit considering the high-level production costs amid slow downstream demand.

Asian Metal: Actually, this year thus far, prices for the Chinese titanium tetrachloride have increased by about RMB1,000/t (USD145/t) with those for magnesium ingot by RMB5,000/t (USD724/t) in total. However, the titanium sponge prices only went up by about RMB7,000/t (USD1,014/t) on the whole. What’s Jinda’s current development? Could you explain the difficulties that are currently being experienced?

Mr. Wang: Well, that’s quite the fact. Most producers are struggling to continue the production because of the obvious price inversions. The titanium dioxide market has been on the rise since the beginning of this year, which has impacted the ilmenite market significantly. The price for the raw material is likely to increase further and we are pressured continually.

Asian Metal: So what would say are titanium sponge producers’ biggest challenges moving forward? And what do you think of Jinda’s main strength regarding these issues will be resolved?

Mr. Wang: The real challenge for our titanium sponge industry is that the production costs keeping at a high level while the downstream demand remaining dim. Cost pressure and sluggish demand, coupled with the basic need to maintain operations of a company have greatly stressed sponge producers for long.

As in Jinda’s case, firstly, we have good-quality products which have been highly recognized by the consumers, that’s why we can keep the regular clients. Also, we have guaranteed that the small size material has a place for the application in military and aerospace area. Cite our 0.83-12.7mm material as example, the price of which is about 10% higher than the 0.83-25.4mm material which can help to guarantee the tight margin to some extent. Secondly, we attach great importance to the costs control. Under current circumstances, we have managed to purchase raw materials at good prices with better payment. Lastly, we are a highly experienced management team with one simple but united target t-----to serve the industry with the best products.

Asian Metal: Recently, we have heard about Xinli to resume titanium sponge production, Sunrui Wanji steps forward in increasing production while Citic Metal halted sponge operations recently. What are your thoughts on the current market movements?

Mr. Wang: The market is moving. I experienced markets rising and going down and sometimes policies led by government have an impact on the industry. It’s safely to say these are normal market fluctuations. Besides, it’s reported that Billions, the titanium dioxide giants will enter titanium sponge market with a designed production capacity of 60,000 tonnes and a sponge plant in Xinjiang province also intends to resume operations. All of these are indeed putting great pressure on the current active producers, touching their nerves. However, as people always put it, opportunities are always accompanied by challenges. We need to find our own ways to get out of woods.

Asian Metal: What are thoughts on the future trajectory in Q1 2017?

Mr. Wang: Personally speaking, I think prices for titanium sponge will remain broadly stable in December. While, as some producers may typically destock the material to ease sales or cash flow pressure before the Spring Festival holiday, considering a poor demand amid relatively oversupply, prices are likely to decline slightly in Q1 2017. Therefore, sponge producers have to experience tough negotiations further as costs are expected to remain firm.

Asian Metal: Is there anything else that you would like to add about Jinda’s next action in 2017? Any final remarks?

Mr. Wang: Nothing special. But for sure we will keep persevering and making still further progress. Jinda is prepared to service this industry with our high quality titanium sponge.

Asian Metal: Thank you very much for taking the time to speak with me. I wish you all the best with Jinda Titanium.

Mr. Wang: It is a pleasure. Thank you.