China to auction Fanya APT stocks in mid-September

China to auction Fanya APT stocks in mid-September
Published date: 30 August 2019

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China's Yunnan provincial government will auction ammonium paratungstate (APT) stocks from the bankrupt Fanya metal exchange on 16 September following a confirmed auction of antimony metal stocks to be held tomorrow.

The intermediate court of Kunming, the capital of Yunnan province, today posted 28,336t of APT for auction on China's e-commerce platform Alibaba.

The starting price is 2.45bn yuan ($343mn), which is equivalent to Yn86,401/t ($137/mtu) with the 13pc value-added tax unpaid. The auction will start at 10:00 Beijing time (02:00 GMT) on 16 September and end at 10:00 Beijing time on 17 September.

The stocks to be auctioned are stored at Changyue Feiping Nonferrous' (Shanghai) Ganzhou and China Distribution's Changde warehouses. The stocks account for around 20-30pc of China's yearly production. The country produced around 109,000t in 2017 and 126,000t in 2018.

Several key domestic producers including China Minmetals, Jiangxi Tungsten and Zhangyuan Tungsten are expected to buy the stocks.

The auction price of Yn86,401/t is around 20-25pc lower than spot prices, which were assessed stable at Yn111,000-113,000/t yesterday, with many producers cutting output and reducing sales at lower prices.

The Kunming court held two auctions of indium stocks from Fanya earlier this year. The auctions pushed down prices for 99.99pc grade indium metal to the lowest level since at least November 2006.

The planned auction of antimony stocks to be held tomorrow has pushed down prices to Yn35,000-36,000/t now from Yn36,000-38,000/t for 99.65pc metal on 15 August when the Yunnan government announced the auction.

APT prices held firm at Yn110,000-112,000/t since 8 August before rising to Yn111,000-113,000/t on 27 August as producers reduced or halted output in response to firm production costs amid tighter concentrate feedstock supply. The auction of Fanya stocks, which have been discussed for some time, were expected to weigh on prices.

Concentrate and APT producers are unwilling to lower prices to attract buyers despite weaker demand. Buyers have opted to observe the market and are keen to press down purchase prices because of the Fanya auction, reducing trading activity in the spot market.

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