China to auction Fanya RE stocks at end of August

China's Yunnan provincial government will auction stocks of dysprosium and terbium oxides held by the bankrupt Fanya metal exchange (FME) at the end of August.

The starting price for 148,750kg of dysprosium oxide is 221.459mn yuan ($31.5mn), equivalent to Yn1,488.80/kg, with 4,050kg of terbium oxide at Yn12.79mn that is equivalent to Yn3,159.60/kg.

The auction price of Yn1,488.80/kg value-added tax (VAT) unpaid for dysprosium oxide is about 13pc lower than spot prices, which are assessed today at Yn1,920-1,950/kg and down by Yn10/kg from Yn1,930-1,960/kg on 13 August. The auction price of Yn3,159.6/kg VAT unpaid for terbium oxide is around 10pc lower than today's price assessment of Yn3,940-3,980/kg.

The auction will start at 10:00 Beijing time (02:00 GMT) on 31 August and end at 10:00 Beijing time on 1 September. The stocks to be auctioned, which are stored at Changyue Feiping Non-ferrous' Ganzhou warehouse, account for less than 10pc of China's annual dysprosium and terbium oxides output.

Minmetals and other large-scale companies are expected to buy the stocks. The auction of rare earth stocks held by the FME has triggered concerns about a possible further fall in dysprosium and terbium oxide prices already under downwards pressure from low consumer demand from the downstream magnet sector. But most market participants are watching for more developments, such as possibility of the stocks to be bought by the government for a national stockpile or by the main producers.

FME's stocks also included 19,228t of bismuth, 26,951t of ammonium paratungstate, 18,661t of antimony and 191t of gallium. The Yunnan superior court on 26 July upheld an earlier decision by the intermediate court in Kunming, which in March handed out fines of Yn1bn to FME and Yn500mn, Yn50mn and Yn5mn to four related companies for illegal fund raising and embezzlement.

Heavy rare earths dysprosium and terbium are used in the production of high-performance rare earth magnets, which are used in consumer electronics, electric vehicles and other automotive applications.