Indium under pressure from possible Fanya auction

Chinese indium prices are expected to fall in the near term because of a potential third auction of stocks from the collapsed Fanya Metal Exchange, which may start at the end of this month.

More details about the auction, including the size of the stocks and starting prices, are not available yet.

Market participants have become nervous after the last two auctions and most of them are now observing how the market will develop.

Most buyers are unwilling to build up stocks on expectations of even lower prices.

China National Corporation for Overseas Economic Cooperation (CCOEC) bought a parcel of stocks for 37.411mn yuan ($5.4mn), equivalent to Yn1,080/kg without a 13pc value-added tax, in the second auction for 34.64t of indium last month.

CCOEC is a wholly-owned subsidiary of state-owned conglomerate China General Technology and approved by China's state council. It has not participated in the indium market prior to the auction, raising speculation that the deal may be for the government's national stockpile.

The first auction for 37.41t of metal, which was bid at Yn1,080/kg on 28 January, failed to attract any buyers. Spot prices have held Yn1,190-1,240/kg — the lowest level since September 2017 — on weak consumer demand.

Fanya held 3,600t of indium before it collapsed, which is equivalent to five to six years of production in China at 2018 production capacity utilisation rates. The brands of indium listed at the exchange include Yunhao, Zhongdu, Yumihe, Honghu, Debang and Yinggeer.

The exchange's reported stocks of main listed products also included 19,228t of bismuth, 26,951t of tungsten ammonium paratungstate, 18,661t of antimony and 191t of gallium. It remains uncertain how the Chinese government will handle these stocks.