Question-and-Answer Session
Operator
(Operator instructions) And our first question comes from Kun Tao. Kun, you may proceed.
Kun Tao – Roth Capital Partners
Hi, good morning. My first question is your – can you give more details, your selling expenses up significantly this quarter. What’s your expectation on the following quarters?
Leada Li
I’m sorry. Can you repeat your question? What is our – sorry, the first part is to explain the selling expenses. And then?
Kun Tao – Roth Capital Partners
So can you explain why the selling expenses up so much this quarter? And what’s your expectation for the following quarters?
Leada Li
Right, okay. So first of all, the selling expenses – the increase of the selling expense is associated with the exports. So as we mentioned in the call earlier that 75% of sales this quarter was contributed by exports. And one of our major customers is Salzgitter Mannesmann International, which is a German company. So in agreement with Salzgitter Mannesmann, I’d say [ph] that they will introduce customers to us. So they are the (inaudible) for, I’d like to call, which is end customer. But in terms of that, we need to pay them 1% of by tonnage. So it’s how many dollars per ton by tonnage agency to Salzgitter Mannesmann. So the fee was actually already added to the selling price to our end customer that the fee that’s paid to Salzgitter is kind of in the selling expenses in dollar a ton. And that is why with this quarter’s increase in exports, the selling expenses went up.
Kun Tao – Roth Capital Partners
So, do you expect the same amount of – about the same amount of money going forward as long as your low carbon steel is maintained at the current level?
Leada Li
Yes. So – because this agency and selling expenses will be proportionate to the amount of export that we sell and deliver every quarter. So in a quarter with high export sales, we will expect the selling expenses to be high as well.
Kun Tao – Roth Capital Partners
Okay. Going to the low carbon sales export – exporting, we see – I have two questions on that. What’s your expectation on export of low carbon sales going forward given your high carbon steel is – the demand for high carbon steel is actually shrinking. So do you expect the same percentage of sales will come from low carbon steels in the next two quarters only this fiscal year? That’s question number one. And question number two is, what’s your expectation on the selling price given low carbon – your low carbon selling price actually increased in this quarter – in the December quarter?
- To read the full transcript on Seeking Alpha, click here »
