Second Fanya auction may support indium prices

Chinese indium prices are expected to stabilise in the near term after a Kunming court's second auction of stocks from the collapsed Fanya Metal Exchange found a buyer today.

The second auction for 34.64t of indium, claimed to be 99.995pc grade, was held on the Alibaba exchange at 10am local time on 24 April and ended today.

The starting price for the total amount was 37.411mn yuan ($5.57mn), lower by 10pc than in the previous failed auction in January.

State-owned China National Corporation for Overseas Economic Cooperation (CCOEC) bought a parcel of stocks for Yn37.411mn, equivalent to Yn1,080/kg without a 13pc value-added tax.

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.

Domestic spot indium prices fell to a 19-month low following reports of the auction because of concerns that the stocks would be mortgaged to banks and sold at lower prices to pay off Fanya's debts.

CCOEC's purchase of the stocks is expected to prevent spot prices from falling further as the concluded price is slightly higher than the spot level.

Beijing has yet to announce when it will auction the rest of the stocks.

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.

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.