Bismuth prices drop as producers liquidate stocks to meet margin calls

Bismuth prices dropped this week as producers in China liquidated stocks to meet margin calls and pay back bank loans following a sharp fall in silver prices, sources told Metal Bulletin.

Bismuth prices dropped this week as producers in China liquidated stocks to meet margin calls and pay back bank loans following a sharp fall in silver prices, sources told Metal Bulletin.

In-warehouse Rotterdam bismuth prices fell to $11.90-12.30 per lb, from $12.10-12.50 the week before.

“There is a lot of material around at the moment. The price of silver is going down quite a lot and producers who make both bismuth and silver are giving the bismuth away to get cash back in order to support their silver business,” a producer based in China said.

The silver price has fallen from about $18 per troy oz to about $15.80, the producer said, and as silver is more valuable than bismuth to producers, they were selling bismuth to pay back deposits to banks and buyers to avoid needing to liquidate their silver stocks.

“They want to hold the silver in the hope that the price will go up again,” he said, adding that this was only affecting the smaller producers, whose main product is not bismuth.

The fall in prices comes after bismuth rallied over the summer as Chinese producers opted to sell to investors on the Fanya Exchange, creating a tightness in the market.

But as producers push to sell more material, demand on the Fanya exchange has been unable to mop up this excess, sources said.

“If producers could sell onto the Fanya  exchange they wouldn’t have to start selling lower to the international market,” a trader said.

Some have said that any drop is only temporary as bismuth stocks on the Fanya Exchange are continuing to rise, providing a floor to the market. Stocks have now reached 16,636 tonnes, or more than a year’s worth of primary production.

“If Fanya is still in the market the price can’t go down that much,” the producer said.

And although demand has been particularly slow since the summer, some expected this could soon pick up, helping to drive prices back up.

“My sales were tough in October but now in November things should improve. And December is normally strong as people want delivery for the new year,” a minor metals processor said.

But while most agreed that demand on the Fanya exchange will continue to provide some support to the market, they were concerned that bismuth prices could continue to come under pressure before this support kicked in.

“We haven’t seen the demand to justify buying at the moment. There is stock on Fanya and so there is that underlying support. But could prices drop to $11.50 or fall back into the $10s? Possibly. Particularly with producers trying to get cash in,” a second trader said.

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Chloe Smith
Twitter: ChloeSmith_MB