Minor Metals Summit 2010: Coverage Day One
Mr. Lang Xianping, the headline speaker at this year’s conference, opened this year’s conference this morning with an overall assessment of the Chinese economy. Mr. Lang is known throughout China for his outspoken disagreement with many Chinese government economic policies, as well as his views on industrial privatization. He lived up to his reputation today. Beginning with his unfortunately confrontational presentation title, ‘How Can China Win the Mineral Resources’. Mr. Lang took the opportunity to emphasize China’s inability to recognize the importance of controlling ‘pricing power’. Taking examples from Ipads and Barbie dolls to BHP Billiton’s recent bid to take over Potash Corp., Mr. Lang argued that China was being taken advantage of by foreign companies that control the market price for products demanded by China and that China has simply been used as a manufacturing depot for foreign enterprises, which move all their profits abroad. According to Mr. Lang, as ‘China continues to open its borders, America continues to get richer’.
Mr. Lang continued by asserting that the Chinese economy is not recovering, but only getting sicker, due to a number of ill-advised government policies on everything from the exchange rate to labor policy. China, meanwhile, is cowering to the United States on the exchange rate and foreign investment issues due to fears of being labeled an exchange rate ‘manipulator’.
The presentation had a very populist feel to it; vocalizing oft-heard Chinese frustrations with domestic policies in the context of a ‘war’ with America, which is unfortunately how trade and diplomatic issues are often framed by Chinese economic and political analysts. I do, however, agree with a number of Mr. Lang’s most basic viewpoints; that the Chinese economy has number of areas of concern, particularly domestic consumption and inflation, which many are in denial about, and that this threatens both China and the global economy. Also, that overcapacity is a long-term issue plaguing many industries and the government’s focus on GDP has only fuelled this problem. Unfortunately, in emphasizing that China’s leaders are providing the wrong ‘prescription for its illness’, Mr. Lang provided few suggestions on what China’s economic and development policies should look like and, although making reference to them, often did not seem to grasp the theory behind many Chinese and foreign natural resource policies.
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Day one’s second presentation was given by Mr. Chen from Beijing Jiya Semiconductor Materials Ltd. Gallium has been a hot topic in the minor metals industry over the past year, with supply shortages and prices almost doubling. Unlike rare earths or antimony, gallium prices have risen primarily due to increasing demand and short supply, and not due to restrictive government policies. Mr. Chen focused on the relationship that gallium has with the ‘low carbon’ economy and ‘green technology’, painting a very optimistic picture for gallium demand through 2015 and also pointing out that the growth in Chinese consumption of gallium, which could exceed the US within 3 years. Mr. Chen discussed potential new applications, including gallium nitrate use in oil catalysts, as well as uses in medical devices, CIGS solar cells and high performance magnets. He also suggested that gallium will remain heavily dependent upon primary production, due to high costs of recovery. I will be interested to hear what gallium recycling companies have to say in response to this in their presentations next month in Xiamen.
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I also was offered the opportunity to present on day one at the Minor Metals Summit, and took the opportunity to summarize our recent reports on the growing dependency on Chinese minor metal supplies and the influence of an appreciating yuan on the international prices for minor metals. The slides from my presentation can be downloaded here: Download SMI Ltd - MMSummit 2010.
Minor Metals Summit 2010: Coverage Day Two
Day two of the Minor Metals Summit, as expected, was much quieter than day one, as many attendees were primarily interested in the presentation by Mr. Lang. The two presentations made on day two focused on the specialized market for magnesium materials. (Unfortunately, Mr. Cao Hai Ying who was scheduled to present on the current titanium market was unable to stay in Shanghai for day two).
The first presentation, made by the well-spoken Sales Manager of Yulin Tianlong Magnesium, Mr. Daniel Chu, outlined major issues affecting production and prices in the Chinese magnesium market. Chinese production currently accounts for about 80 percent of the world’s magnesium, but suffers from anti-dumping tariffs imposed by the United States. According to Mr. Chu, Chinese magnesium production, like the production of many minor metals in China, continues to be energy and labour intensive. In the past few years, price volatility – which has pushed domestic magnesium prices as high as Y40,000/MT (about US$ 6000/MT) and as low as Y15,000/MT (about US$ 2250/MT) – have encouraged many downstream end-users in the alloy industries to substitute magnesium with aluminum. Moreover, the limited number of applications for the metal and lack of a primary end-use industry have made the outlook for magnesium unstable.
Mr. Shi Shenghui, the technical engineer from Shenzhen Amei Technology, concluded the conference with a brief introduction to the application of magnesium in metal alloys.
In all, it was a good conference this year with both new and old faces attending, and (Mr. Lang’s presentation notwithstanding) a more optimistic atmosphere than last year. Fortunately, I was also able to squeeze in a quick trip to the World Expo, which is being held in Shanghai until the end of October. Although I didn’t have time to see the interior of many of the pavilions (line ups, even mid-week, are still 1-4 hours), the size and scale of, well everything, is astounding – even for someone who has lived in China for a number of years. Thankfully, I have made it back to Beijing before the start of ‘Golden Week’, which begins with the Chinese National Day tomorrow.
- Terence Bell
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