Asian Metal: Hello, Mr. Hu! Welcome to the Asian Metal interview column. First, could you please introduce the basic information about your company?

Mr. Hu: Shandong Jinmeng New Materials Co., Ltd. was established in 2003. Over the past nearly two decades, we have developed into a state-recognized high-tech enterprise, as well as a Shandong Province Specialized New Enterprise. Our company focuses on the research, development, and production of new materials, with our main products including silicon carbide, silicon carbide micro powder, white fused alumina, brown fused alumina, refractory materials, steel deoxidizers, silicon metal, silicon carbide ceramics, and silicon carbide micro-channel reactors, among others. These products are widely used in abrasives, cutting materials, surface treatment, thermal insulation materials, non-stick coatings, foam ceramics, and thermal conductivity materials. One milestone worth mentioning is that in 2019, we were honored to become a certified supplier to Apple Inc. This recognition of our product quality and corporate strength by such a renowned international enterprise was a proud moment for us.

Asian Metal: Since the third quarter of this year, the green silicon carbide market has seen a downturn, with prices continuing to fall. What do you think is driving this phenomenon?

Mr. Hu: The downturn in the domestic silicon carbide market is primarily due to the gradual decline of several key industries, such as real estate, infrastructure, and foreign trade. This trend is not expected to improve in the near future. Recently, the green silicon carbide market has faced unprecedented challenges: prices continue to decline, and market performance remains sluggish. There are several contributing factors. First, the slowdown in the domestic real estate market and infrastructure investment has led to reduced demand for building materials and related products. Second, the global trade environment remains uncertain, especially with the ongoing international trade tensions, which have led to a shrinking foreign trade market. This, in turn, has affected the export of silicon carbide and related materials. Moreover, overcapacity and product homogenization have intensified market competition, triggering price wars and further eroding profit margins for enterprises. Taken together, these factors make it difficult to foresee a significant market recovery in the short term.

Asian Metal: Currently, competition between domestic grain sand and micro-powder producers is fierce, with many enterprises opting to reduce production or cut prices to boost sales. What is your company’s current situation?

Mr. Hu: In this highly competitive market, many manufacturers of grain sand and micro powder have had to reduce production or engage in price competition to survive. However, our company has managed to maintain its competitiveness by investing in the improvement of production processes, equipment upgrades, and the adoption of internationally advanced testing instruments. We remain committed to meeting our customers' needs for product differentiation and cutting-edge development. By working closely with our customers, we co-develop products that meet their specific requirements using the latest technologies. For example, when developing materials for Apple’s mobile phone back processing, we not only met Apple's stringent technical specifications but also used calibration instruments from the UK-based Malvern Instruments for testing, ensuring that our products met international quality standards. These efforts have helped us establish technical barriers within the industry, allowing us to weather the downturn in the market. In 2018, we also introduced large mixing machines and automated packaging production lines, which significantly improved product consistency and reduced defect rates by more than 50%. This innovation has also reduced labor intensity and enhanced the working environment for our operators.

Asian Metal: How has your company responded to the downturn in the downstream market for silicon carbide in recent years?

Mr. Hu: While the market demand for traditional products is declining, we are actively adapting to market changes and seeking new growth opportunities. One key area we have identified is the growing demand for bulletproof materials, driven by the ongoing Russian-Ukrainian war and global instability. In response, we have invested $30 million in upgrading our equipment and production processes to meet the rising demand for silicon carbide in bulletproof materials. We are now capable of producing 10,000 tons of silicon carbide for bulletproof materials annually, and we currently hold a market share of over 40%, with sales accounting for more than 30% of our total revenue. Additionally, with the upgrading of China's vehicle emission standards to National Six, silicon carbide ceramics (DPF) have become a crucial material for automobile exhaust treatment. We began developing silicon carbide materials for DPF applications a decade ago, and our products now meet international standards, capturing more than 70% of the domestic market. Looking ahead, we plan to further develop materials for aluminum-silicon carbide composites, high-purity silicon carbide, high-thermal-conductivity silicon carbide, and semiconductor-grade silicon carbide, to meet emerging market demands.

Asian Metal: Do you have any plans to expand your export business? How do you plan to balance domestic and export sales?

Mr. Hu: We have been exporting various products globally for many years, primarily through trading companies. However, to further expand our international presence, we have decided to invest more in personnel and capital to strengthen our foreign trade operations. We have already registered an international trading company in Japan to better serve the European and American markets, particularly the growing demand for bulletproof materials. Our goal is to increase our foreign trade business by more than five times over the next three years, with exports eventually accounting for more than 40% of our total revenue.

Asian Metal: What is your outlook on the supply-demand dynamics and price trends for the green silicon carbide market over the next six months?

Mr. Hu: Based on current market analysis and forecasts, we do not expect significant growth in demand for traditional green silicon carbide or black silicon carbide in the next six months, and there is a chance that demand may continue to shrink. This is driven by several factors, including a global economic slowdown, reduced demand from downstream industries, and increased competition in the market. As a result, we anticipate that the price of green silicon carbide will remain under pressure, and the market’s supply-demand balance will continue to face adjustments.

Asian Metal: What do you think is the future development direction for green silicon carbide enterprises in China?

Mr. Hu: For domestic green silicon carbide enterprises, the key to future development lies in improving product technology to better meet market demands, with a strong focus on customer needs. The green silicon carbide market must continue to serve existing industries while also actively developing new applications, such as aluminum-silicon carbide composites, specialized ceramic materials, high-purity silicon carbide, and silicon carbide ceramic films. These new areas of application will drive growth and increase the value-added potential of green silicon carbide products. However, these advancements will place higher demands on the processing capacity and technological capabilities of green silicon carbide enterprises. To stay competitive, companies will need to continuously innovate and upgrade their operations to adapt to market changes and challenges.

Asian Metal: Thank you, Mr. Hu, for taking the time to speak with us. We look forward to the continued success of Jinmeng New Materials!

Mr. Hu: Thank you! I also wish Asian Metal continued success and growth!