In 2011, the market situation changed, and the price of the products fluctuated with the ups and downs. In the turbulent gap, we can smell the market crisis, but we also saw the product prices begin to become more reasonable under the turmoil. The price of diamonds has been on the rise in the first half of 2011, and the upward trend is very strong. However, after entering the second half of the year, the price of diamonds has begun to fall, and the relationship between supply and demand in the market has begun to change. Visited Zhongnan Jiete Superhard Materials Co., Ltd., listening to the general manager Zhang Kui for us to analyze the current situation of the superhard materials market, and also learn how Zhongnan is responding to the current market conditions. Reporter: Starting from the second half of 2011, the price of the diamond market has started to decrease slightly in the first half of the year. What do you think is the cause? Zhang Kui: I think this is a normal return of the market. Since 2010, the raw materials for polishing floor tiles have gradually replaced the previous silicon carbide with diamonds, which has increased the demand for diamonds in the market. For a time, the shortage of supply caused many manufacturers to start expansion. The old presses were also started on the line. Driven by profits, many laymen also began to squeeze into the diamond industry. The market was extremely hot, and the price of yellow diamonds was also from 1 Mao 8 rose to more than 3 gross. Of course, in addition to the shortage of product prices, there is no shortage of raw material prices. As far as the market is concerned, diamonds are really profitable and the investment benefits are very good. However, with the anti-dumping of foreign floor tiles in China in 2011, the export volume of floor tiles began to decline sharply. Together with the domestic regulation of the real estate market, the domestic floor tile market as a whole showed a sluggish trend. The situation then evolved into: the increased market is shrinking, and diamond production has been rising, which has led to a drop in the price of diamonds. But I personally feel that diamond is gradually returning to a reasonable profit value. In fact, we can now see a strange phenomenon: raw materials and labor costs are rising, but the price of diamonds is falling. However, I personally think that this is a reasonable adjustment of the market. For the current diamond market price, 0.18 yuan - 0.22 yuan is normal, and the ordinary short process diamond should return to 0.14-0.16 yuan, and the profit is controlled. Within 10% is reasonable. reporter : You just mentioned that the output of diamonds has been rising, so is the situation of overcapacity in the market a foregone conclusion? Zhang Kui: The problem of overcapacity, but also from the different levels of products, from July to September 2011, the price of low-end diamond products has declined, and the phenomenon of overcapacity is unquestionable, but at the same time, The market demand for 20-grade to 40-grade diamonds is relatively large, and there is even a shortage of supply. High-end products can basically meet the market demand, but the mid-end products have certain gaps. It can be said that from now on, the market demand for mid-end products is still relatively large. reporter : The changes in market prices are inseparable from the impact of the market environment and national policies. What impact does this change have on your company's operations? Zhang Kui: From 2010 to the first half of 2011, the market is a strange development period. You may not have expected the market to expand as it will be, rather than steadily developing as in previous years. It can be said that such a situation is inseparable from the influence of the market environment and national policies. However, for the time being, the impact of our diamond products is not obvious. First of all, as a leading company, Central South has a relatively large market share. Secondly, our products are biased towards high-end. Zhongnan has always been aiming at producing high-end diamond products, and it has a large share in the market of cutting and dressing. In the aspect of grinding, the low-end products of polished floor tiles, The market share is relatively small. Therefore, the current impact on us is not great. Our CBN products have been affected by the decline in foreign markets. First of all, CBN has the pressure of raw materials, cost pressure, artificial pressure and other factors, and then there are cyclical problems. Because in August of each year, many customers will stop working, repairs or holidays, etc., which will weaken the market's prosperity. So, overall, our CBN market has indeed declined somewhat, but the impact is not very obvious, mainly because our customer base is relatively fixed and relatively large. reporter : How do you think about the trend of diamonds instead of ordinary abrasives? Zhang Kui: This is an inevitable trend. Although the price of diamond is higher than that of ordinary abrasives, the cost performance of diamond is relatively high. Investing in the same abrasive costs, the quantity and benefits of diamond processing are combined in general, while ordinary abrasives not only consume a lot of energy, but also cause serious pollution. The year before, I went to the Foshan market to investigate. If a market uses ordinary abrasives to polish the floor tiles, the consumption per month should reach 2 million tons. At the same time, the dust and mud generated are very polluting to the environment, but if diamonds are used for polishing, The amount used is only 10 million carats (2 tons), and the diamond has little environmental pollution. No one dared to think about applying diamonds to sanding tiles a decade ago. First, the price of diamonds was high at the time. Second, the environmental requirements at that time were not so strict. Now we can see that this alternative process is gradually being implemented. However, in actual production, we can also see that the current application rate of diamond is not high. For example, in the floor tile, this piece is only used for rough grinding, while the fine grinding and fine polishing is not used yet, and will be used later. With the fall in diamond prices and the development of multiple fields, the use of diamonds will increase dramatically, although this requires a process. reporter : What advantages do you think Zhongnan's products have compared with similar products on the market? Zhang Kui: We mainly do two things well, one is quality, the other is service, and it has cost advantage and scale advantage. The first is the quality advantage. From the point of view of sales, our products look very pure in color, and the colors are relatively consistent, and the fluctuation of product quality is small. From 2003 to the present, the quality of products has been stable. Second is the service advantage. Zhongnan has a strong tracking of product shipments. As far as I am concerned, I will visit customers at least once a year, and we will receive more customers. Zhongnan has been doing a good job in actively communicating with customers. The Central South will use feedback to understand the customer's needs and then pass this information to the R&D staff. Frequently doing market communication at the forefront, it has a good role in promoting the development of new products, and through the collection of market information, the collection of customer information, can also better serve customers. reporter : Does the company currently develop new products or develop new projects? Zhang Kui: In terms of new projects, we are now focusing on two aspects: one is the development and manufacture of micropowder, and the other is the manufacture of coarse-grained synthetic diamonds. At present, the output of micronized powder is not very large. Central South hopes to have a high starting point, like diamonds, to play our own brand. At present, we use silicon carbide for wire cutting in the solar field, but the utilization rate of silicon carbide is only 20%-30%. If diamond is used, the utilization rate of electroplated diamond wire may reach 80%-90%. And the pollution of diamond is small. Another project in Central South, coarse-grained synthetic diamonds are mainly used in wire-drawing mills, turning tools and jewelry. At present our yellow diamond can do 5 mm. We hope to develop more fields and make diamond applications more and more widely used. reporter : What is the current situation of foreign diamonds? How do companies adapt to the current market conditions? Zhang Kui: The current European and American markets are not very prosperous. The Japanese market is also sluggish due to the earthquake. It can be said that the diamond market abroad is not very optimistic. What is more prominent is that the reduction of orders for foreign floor tiles and stone directly affects the sales of domestic diamonds. The incentives for this result are related to the 2008 economic crisis. I feel that the current economic downturn is a continuation of the 2008 economic crisis, because the government adopted a very good means to develop the economy and buried hidden dangers for problems that arise in the future. The most obvious is the rise in prices, the market has a false prosperity, resulting in excess liquidity, the country is tightening monetary policy, and the result is that many small businesses have closed down. This has created many social problems. Therefore, from the current situation, I think that enterprises should be relatively conservative, and they must use cash as the king, so that the survival and development of enterprises can be guaranteed. reporter : What do you think is the future development of the super-hard industry? Zhang Kui: Nowadays, there are diamonds and CBN for super-hard materials. These two products have no substitutes so far, so in my opinion, these two products have a long life. Secondly, in the past, the price of super-hard materials was relatively high, so it has not been fully opened in application. But now, the price of super-hard materials is becoming more and more reasonable, and the application is constantly expanding, such as cutting, cutting, grinding and many other aspects. Use super hard materials. Furthermore, superhard materials are a consumable item and cannot be reprocessed. After use, new ones must be purchased, which determines its high usage. It is also for these reasons that I think their prospects are still very good. reporter : What kind of development plan does Zhongnan have in the future? Zhang Kui: Central South still value the current main business. Before the listing in Central South China, we still focus on the main business - focusing on the manufacture of diamond single crystal, which we have been insisting on. Moreover, it is also the direction that Zhongnan has been striving to make a good brand and do some research in related fields. Central South is now in a benign state of development, so we attach more importance to doing a good job. Ending: From the conversation with the general manager of Central South, Zhang Kui, it can be seen that Zhongnan is a very practical and stable enterprise. In fact, doing business is a long-distance running. The key is that both the peak and the trough can be used with ease.
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