Fanya auction, low demand weigh on indium prices

Chinese indium prices are expected to fall further after a Kunming court's second auction of stocks from the bankrupt Fanya Metal Exchange and low demand from the indium tin oxide industry.

Domestic spot prices fell to a 19-month low following reports of the auction.

The second auction for 34.64t of indium, which is claimed to be 99.995pc grade, will be held on the Alibaba exchange at 10am local time on 24 April and end the next day. This follows a failed first auction on 22 January.

The starting price for the total amount will be 37.411mn yuan ($5.57mn), which is 10pc lower than in the previous auction.

The first auction failed to find any buyers as the starting prices were higher than spot prices.

The second auction may also fail as few buyers are willing to buy such a large volume, given that the indium market is oversupplied. The global indium market has been in surplus in all but one of the last seven years since Fanya launched.

The court will hold a third auction in 60 days if the second auction fails, according to Chinese law.

The spot market for 99.99pc grade metal started to fall following news about the auction, with prices assessed lower at Yn1,190-1,240/kg today from the 16 April assessment of Yn1,220-1,270/kg. Listed prices on the Wuxi Stainless Steel Exchanged were unchanged at Yn1,220-1,270/kg today, after falling by Yn30/kg on 16 April.

Many market participants have expressed concerns about the redistribution of indium stocks held by the exchange, which could raise spot supply sharply and cause prices to collapse because of weak demand from the downstream indium tin oxide industry.

There are five ways in which the government could offload the material, delegates heard at the Minor Metals Trade Association conference in Edinburgh last week. The metal could be added to the national reserve, sold to producers, sold in judicial auction, given to a newly established company in a debt-for-equity arrangement, or returned to investors — but each option poses potential difficulties.

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

Fanya's reported stocks of its main listed products also included 19,228t of bismuth, 26,951t of tungsten ammonium paratungstate (APT), 18,661t of antimony and 191t of gallium.