Higher auction prices underpin Chinese indium market

Chinese indium prices are likely to continue to rise in the short term, supported by higher auction prices settled by two major producers and gains in futures prices, market participants said.

Prices for 99.99pc grade metal were assessed at 1,400-1,450 yuan/kg ($217-224/kg) ex-works today, the highest since January 2019 and up by Yn100/kg from 26 August. Export prices were assessed at $215-225/kg fob yesterday, an increase of $15/kg from 26 August.

Base metals producer Shanxi Zinc auctioned 20t of indium at Yn1,700/kg on 27 August, while Yuguang Gold and Zinc raised its selling price for 10t of indium stocks to Yn1,700/kg on 30 August from Yn1,163/kg in an auction held on 30 July. It had planned to auction 20t.

The 30t of indium was bought by major Chinese minor metals firm Vital Materials (Kunming Rongke), some market participants said.

Listed prices on the Wuxi stainless steel exchange increased to Yn1,360-1,400/kg today from Yn1,340-1,380/kg yesterday.

Most producers are upbeat about future price direction and were reluctant to accept bid prices below Yn1,700/kg today.

"Futures prices on the Wuxi stainless steel exchange have risen sharply since 27 August, reaching a multi-year high of Yn2,000/kg that day, but falling to Yn1,800-1,900/kg today," one producer said.

"There is a disparity between the spot prices and future prices, while spot prices are being pushed higher by the exchange's future prices."

The spot indium market bottomed out in January 2020 after Vital Materials bought 3,600t of stocks held by the former Fanya Metals Exchange (FME) through a government-led auction. The spot market has been more readily influenced by investor trading activity than supply/demand fundamentals since the collapse of FME.

Prices rose to Yn1,400-1,450/kg ex-works in mid-September last year in response to the higher prices on the Wuxi stainless steel exchange, with a major stockholder on the exchange trying to push up prices and then sell its stocks to make profits, according to market participants.

Prices subsequently fell back but then increased again to Yn1,350-1,400/kg ex-works in early March this year following higher futures prices on the exchange.