Affected by weak international prices of cobalt, which dropped to an average of US$17 per pound during the first three quarters of 2011, the company struggled with lackluster sales of PTZ oxidation catalysts in the year. As cobalt prices continued spiraling downward in the fourth quarter of 2011, institutional investors projected the company’s pretax profits at only NT$40 million for the quarter, with full-year pretax profits to drop around 30% yearly to an estimate of NT$150 million.
However, David Yen, the company’s president, is confident that Mechema’s business performance will trend upward month by month in 2012, partly because the international cobalt price has turned around recently due to recovering market demand. Furthermore, he continued, the company has successfully built solid footholds in the U.S. and European countries over the past few years, which will help the company to gain more growth momentum for the business of oxidation catalysts in the years to come.
In the meantime, Yen also eyes market potential of cathode materials for lithium-ion batteries, saying that lithium-ion batteries using lithium cobalt oxide as the positive electrode incorporating manganese and nickel are better fitted to electric cars and will become the mainstream battery model for the purpose in the future.
To ride on the growing trend, the company has ventured into developing manganese-containing cathode materials and is now capable of making such products. Besides, Yen confirmed that his company will sharply expand its monthly output of positive electrode materials to about 900 metric tons this year to better satisfy its customers. He stressed that cathode materials will contribute around 50% to his company’s overall revenue to serve as the strongest growth booster starting in the year.