China’s Yunnan To Auction Fanya’s Cobalt Stocks

China’s Yunnan provincial government will auction 21t of cobalt metal stocks from the bankrupt Fanya metal exchange (FME) on 5 October, following on from a string of auctions of rare earths, antimony and tungsten.

The intermediate court of Kunming, the capital of Yunnan province, posted the auction on China’s largest e-commerce platform Alibaba.

The starting price is 3.92mn yuan ($550,000), which is equivalent to Yn186.50/kg with the 13pc value-added tax unpaid. The auction will start at 10:00 Beijing time (02:00 GMT) on 5 October and end at 10:00 Beijing time on 6 October.

Many producers and trading companies have shown interest in the auction because of lower inventories in the spot market. But it is expected to have limited impact on the market as the volume is small. China produces 50,000 t/yr of cobalt metal.

Prices for 99.8pc grade cobalt metal were assessed at Yn275-290/kg yesterday, up by Yn5/kg at the high end from 19 September because of low supplies since mid-July. Producers have raised offer prices and increased production to meet higher demand.

The Yunnan superior court on 26 July upheld an earlier verdict by its subordinate Kunming court, 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. The final court decision signalled that all stocks held in FME will be auctioned.

The Kunming court auctioned FME’s tungsten APT stocks on 17 September, with domestic producer China Molybdenum securing the material by paying a higher settlement price. This has since shored up confidence in the spot market and pushed prices up sharply.

China Minmetals also in August bought 18,611t of antimony, 148,750kg of dysprosium oxide and 4,050kg of terbium oxide stocks from the FME in two auctions held by the Kunming court.

Chalco could buy gallium and germanium stocks from FME, which would relieve concerns about a sudden release of the stocks that could cause prices to collapse.

The FME held 197t of gallium and 92t of germanium stocks before it collapsed in 2015. The exchange’s stocks also include 19,228t of bismuth, 338t of selenium, 170t of tellurium, 35t of vanadium pentoxide and 3,629t of indium.